An incoming Conservative government would rip up Britain’s tripartite system of financial regulation and transfer powers to the Bank of England to avoid a repeat of the banking crisis. George Osborne, shadow chancellor, said on Sunday he would abolish the Financial Services Authority, only a decade after it was established by Gordon Brown. The FSA’s role in supervising individual banks, building societies and other financial institutions would be handed back to a beefed-up Bank of England. Mervyn King, Bank governor, has said publicly he does not want that job. However Mr Osborne told the BBC’s Andrew Marr programme that the tripartite regulatory system of FSA, Bank and Treasury would be scrapped. He wants lines of accountability going “straight to Threadneedle Street”. To assist Mr King in performing the new role, a new financial policy committee would be set up mirroring the Bank’s monetary policy committee. It would have external members and the Bank would have a third deputy governor to oversee prudential supervision. Meanwhile a new Consumer Protection Agency would take on some of the roles of the FSA.
Lex worries that the authority of Hector Sants, the FSA chief executive, and Lord Turner, chairman, will ebb away the likelier a Conservative victory becomes.