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Treasury Select Committee report to say ‘no’ to FSA being given insolvency powers

The long-awaited Treasury Select Committee report on the Northern Rock crisis is set to be published tomorrow.

It has been reported that the report is expected to conclude that the FSA should not be given new powers to intervene to help distressed banks.

This comes as the Chancellor Alistair Darling will publish his own plans for reform next week before a 12-week consultation.

The Times suggests that leaks of the report reveal that the TSC believes the FSA does not deserve additional powers, given that it was unable to identify the flaws in the Northern Rock business model and prevent a subsequent run on the bank.

The Chancellor will also face criticism but not to the same degree as faced by the FSA and the Bank of England.

The Northern Rock board will also be under scrutiny, with suggestions the report will expose the failings of the board and question why it was allowed to stay in place for several months following the run on the bank.

Darling’s own reforms include plans to give the regulator insolvency powers which would allow it to step in earlier if it was faced with the same situation again.

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