Tripartite system’s days are numbered
By politics.co.uk staff
George Osborne will replace the tripartite system of financial regulation with a raft of new bodies in a process set to be complete by 2012.
The chancellor announced in his first Mansion House speech that the Financial Services Authority (FSA) would “cease to exist in its current form”, with its macroprudential powers restored to the Bank of England.
Instead a new regulator operating as a subsidiary of the Bank will be created, charged with oversight of banks, investment banks, building societies and insurance companies.
An independent financial policy committee will be set up at the Bank. This will be tasked with assessing the economy’s “macro issues” which could threaten economic and financial stability.
“We do not undertake these reforms lightly, and we do so only because we believe they are absolutely necessary,” Mr Osborne told his City audience.
“We will handle the transition carefully, consult widely and get this right.”
Critics say the new system is likely to lead to confusion and competition between the new regulatory bodies.
A Consumer Protection and Markets Authority will also be established to regulate the conduct of every authorised financial firm providing services to consumers.
“I can also confirm that we will fulfil the commitment in the coalition agreement to create a single agency to take on the work of tackling serious economic crime that is currently dispersed across a number of government departments and agencies,” Mr Osborne added.
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