Industry figures warned the Treasury Select Committee (TCS) in October that poorly-defined roles for the two bodies could lead to “turf wars” between regulators – and that the PRA would need to be a “superior” body for the system to function efficiently.

The report, jointly produced with the Bank of England, sets out the PRA’s power of veto in cases where firms are dual-regulated.

“The PRA may direct the FCA not to exercise a power or not to exercise it in a specified manner if the PRA believes that would threaten the stability of the UK financial system, or result in the failure of a PRA-authorised firm that would adversely affect the UK financial system,” the report read.

But the FSA stressed the independence of both bodies would be essential. The regulators would not conduct supervisory activity jointly, because to do so would lead to “confusion about each regulator’s objectives, focus and culture”.

Respective risk-profiles for a firm may be significantly different, but will reflect “their very different statutory objectives”, the FSA said.

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The emphasis, the guidance says, will be on the sharing of information rather than joint regulation. The FCA and the PRA will meet quarterly to discuss potential policy initiatives, and to assess whether any co-ordination would be “effective in practice”.

However, there may be problems with sharing information received from third parties, such as cases involving overseas regulators or companies. “The regulators’ ability to share such information with each other may in some instances be constrained by the terms of agreements with those third parties,” the report warned.

In a report last week into the replacement of the FSA, TSC head Andrew Tyrie said the lack of accountability that “plagued” the regulator should not be allowed to be repeated. The FSA did not succeed in protecting the public from “spectacular regulatory failings”, he added.