Mortgage News
FSA to be abolished by 2012
Last night, Chancellor George Osborne fulfilled the Tory’s campaign promise to scrap the FSA after what he called its spectacular regulatory failure and bolster the Bank of England’s supervisory powers.
Osborne’s first speech to a City audience at Mansion House announced a series of wide-ranging reforms set to transform the UK’s financial regulatory landscape by 2012.
Osborne confirmed the government will abolish the FSA in its current form handing many of its macro-prudential responsibilities to the Bank of England.
Osborne said the move will create an independent Financial Policy Committee at the Bank, which will have the tools and the responsibility to “look across the economy at the macro issues that may threaten economic and financial stability and take effective action in response.”
The government also plans to set up a new Consumer Protection and Markets Authority to oversee every authorised financial firm offering services to consumers, including financial intermediaries and their conduct of business.
Serious Financial Crime will also be tackled head on through a Serious Economic Crime agency tasked to replace the work of a number of agencies spread across government departments and agencies.
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“We take white collar crime as seriously as other crime and we are determined to simplify the confusing and overlapping responsibilities in this area in order to improve detection and enforcement,” said Osborne.
Hector Sants, FSA chief executive, previously on the cusp of retirement has agreed to stay on to oversee the transition for another three years and become the first new deputy governor and chief executive of the new prudential regulator.
The Government has also given the green light to establish an independent commission on the banking industry. “It will look at the structure of banking in the UK, the state of competition in the industry and how customers and taxpayers can be sure of the best deal,” said Osborne.
Sir John Vickers will chair the Commission, former chief economist at the Bank of England, member of the MPC and Chair of the Office of Fair Trading, supported by Martin Taylor, Claire Spottiswoode, Martin Wolf and Bill Winters.
The Commission is due to report next year.
For a full transcript of the Mansion House speech, click here.