Shadow Chancellor George Osborne has set out plans to abolish what he says is a “failed” tripartite system of regulation and give the Bank of England responsibility for maintaining financial stability.
Under the proposals, IFAs and mortgage brokers would be regulated by a new entity – the Consumer Protection Agency.
In their White Paper, published today, the Tories say: “The CPA will take a much tougher approach to consumer protection and will be given a mandate to act as a consumer champion. It will be a far more consumer-orientated, transparent and focused body than the FSA.”
The CPA would have the power to name and shame firms who break the rules.
Regulation of consumer credit would be transferred from the Office of Fair Trading to the CPA.
The Conservatives would consult on which regulatory authority should take on the FSA’s various other responsibilities including markets and securities regulation, ‘approved persons’ licensing and listing authority responsibilities.
They say markets regulation could be combined with the Takeover Panel and Financial Reporting Council to streamline the number of regulators and create a powerful markets authority similar to many European countries.
The Tories’ Bank of England would have the power to regulate the pay structures, risk, complexity and size of financial institutions, and require those with structures that put financial stability at risk to hold large amounts of capital as an insurance policy to protect the taxpayer.