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FSA to be split into two separate bodies

At the launch of a three-month consultation exercise on UK regulatory reform, Mark Hoban, Treasury minister, confirmed a plan to split the Financial Services Authority into two separate bodies.

“Getting the design of the regulatory system right is vital to the long-term stability and sustainability of the financial system – and therefore vital to the task of rebuilding a sound economy based on production and investment, rather than speculation and excessive borrowing,” Mr Hoban told an audience at the London Stock Exchange.

The government have said that financial stability will be given greater weight than consumer protection where the two conflict.

A new Prudential Regulatory Authority within the Bank of England would oversee the safety and soundness of banks, insurance companies and broker-dealers, including granting permission for their activities and approving their senior management, the Financial Times reports.

A separate Consumer Protection and Markets Authority would focus on protecting customers and preserving market integrity. It would also approve consumer-related management positions and supervise investment managers and other non-systemic financial groups.

 

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