By Jason Theodorou

George Osborne is to give the Bank of England prime responsibility for regulating the UK financial sector, with the Financial Services Authority (FSA) limited to a subsidiary role. Osborne will reveal the structure of the arrangement in a speech at Mansion House on Wednesday night.

The FSA will give overall authority for supervising banks over to the Bank of England, and will lose its power to investigate financial crimes to a new 'super detective' organisation. Responsibilities for the public will be divested to a Consumer Protection Agency.

Osborne said: 'Our plan is to hand over to the Bank of England responsibility for macro-prudential supervision, that should never have been taken away from it'. The Governor of the Bank will be able to control financial stability and interest rates, in addition to chairing a Committee of Financial Stability to forsee problems in the UK economy.

Prior to the General Election, the Conservatives had planned to scrap the FSA, but in a compromise with the Liberal Democrats the regulator has been kept in a limited capacity.

Shadow chancellor Alistair Darling has warned that the new structure risks 'a dog's breakfast of a regulatory system, where no-one knows who is making decisions... or who is in charge'.

Graeme Leach, Director of Policy at the IoD said: 'We welcome the idea of giving the FSA responsibility for individual bank monitoring whilst allowing the Bank of England to focus on macroprudential regulation'.

Osborne is expected to clarify details on a levy on banks in the emergency Budget, which will be delivered on 22 June.

Join us on