The Government has published legislation that
will fundamentally transform financial regulation.
The Bill:
- Gives
the Bank of England responsibility for protecting and enhancing financial
stability
- Abolishes the Financial Services Authority
(FSA) and creates the Financial Policy Committee, the Prudential Regulation
Authority and the Financial Conduct Authority, also providing them each with
powers to try to ensure the stability of the financial sector and the
protection of consumers
- Empowers regulators to look beyond tick-box
compliance with a regulatory culture of judgment, expertise and proactive
supervision.
The 1000 page bill took more time to sort than
expected, with various interests arguing over who should do what.
The transfer of powers from one regulator to
another is not instant; it will take between one and two years.What is still
missing is any exact dates.
The dust has not settled. MPs on the Treasury
Select Committee still want some areas clarified and tightened up. Andrew Tyrie
MP, says, "Force of argument seems to be winning the day on some key
points. The proposals still fall short of what is needed."
Key battle point is between the Commons and the
Bank of England, as Tyrie explains: "The role and accountability framework
of the Bank of England should be decided by Parliament, with the executive
explaining their decisions to MPs and the Treasury Committee, rather than
negotiations between the Bank and the Chancellor.’
A final warning shot that regulation may not go
as quickly as the government hopes, comes from those MPs "The fact that
the Government has not waited to take account of the Treasury Committee's
report on the Financial Conduct Authority highlights concerns that we are
legislating too fast. We have to take the time to get this legislation right.
This is only the start of the legislative process, however. Parliament must be
given the time to discuss these important issues in greater detail."
MPs have already won several victories including that the government
will wait until the FCA has bedded down before revisiting the issue of whether
to pass OFT powers with respect to competition law to the FCA.
