By Marcus Leach
The Government has today (Friday) published legislation which will fundamentally transform and strengthen financial regulation in the United Kingdom, Financial Secretary to the Treasury, Mark Hoban, has announced.
The new regime sets out a clear, coherent and comprehensive regulatory framework, replacing the uncertainty and inadequacy of the previous structure, and helping to mitigate against future risks to stability.
- Gives the Bank of England responsibility for protecting and enhancing financial stability, bringing together macro and micro prudential regulation;
- Abolishes the Financial Services Authority (FSA) and creates a strengthened regulatory architecture consisting of the Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority, also providing them each with clarity of responsibility and the necessary powers to ensure the stability of the financial sector and the protection of consumers; and
- Empowers authorities to look beyond 'tick-box' compliance and fosters a regulatory culture of judgment, expertise and proactive supervision.
Today's Bill has been shaped by extensive consultation with both stakeholders and Parliament and, while the fundamental elements of the new framework are in line with the model put forward by the Chancellor in 2010, contains a number of refined policy proposals, including measures to:
- Legislate for a new crisis management regime, providing greater clarity and accountability to protect the taxpayer during times of crisis by providing the Chancellor with new powers over the Bank of England where public money is at risk; and
- Transfer responsibility for regulating consumer credit to the Financial Conduct Authority to better protect consumers.
"This Government has taken the necessary action to tackle the difficult and dangerous legacy left behind by the financial crisis, including a tripartite structure not fit for purpose," Mr Hoban said.
"We've listened to the views of stakeholders following an unprecedented period of consultation, and are determined to strengthen the financial system in a way that safeguards financial stability and protects consumers."
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