George Osborne: FSA will be scrapped
17th June 2010
Chancellor George Osborne has announced major changes to the regulation of the UK's financial sector.
In his first Mansion House speech, the chancellor revealed that the tripartite system of financial regulation will be overhauled and the Financial Services Authority (FSA), the City's main watchdog, will 'cease to exist in its current form'.
'What we are proposing is a new system of regulation that learns the lessons of the greatest banking crisis in our lifetime,' he told the audience.
Mr Osborne explained that a new 'prudential regulator' will be established as a subsidiary of the Bank of England and will oversee the activities of retail and investment banks, insurance companies and building societies.
He also announced that a new Financial Policy Committee will be created at the Bank to examine and deal with macroeconomic issues affecting the UK, while a 'powerful' Consumer Protection and Markets Authority will be launched to tackle serious economic crimes.
The FSA came into being in its current state in 2001 when it was granted new powers by the Financial Services and Markets Act to 'promote efficient, orderly and fair financial markets'. Under the tripartite system, it regulates the sector alongside the Bank of England and the Treasury.