The document sets out detailed proposals for reform of the financial services sector, first announced by the Chancellor in his Mansion House speech on 16th June 2010.
The Chancellor set out plans to overhaul the system of financial regulation giving the Bank of England powers over macro prudential regulation through a newly established Financial Policy Committee (FPC), which will be established on an interim basis from Autumn 2010.
The Government intends to introduce legislation to create the new regulatory authorities in the current Parliamentary session, and expects passage of primary legislation to be completed in the next two years.
The FSA will retain its current responsibilities throughout the transition period, although a new interim Financial Policy Committee will be established in the autumn on a non-statutory basis. The FSA intends to move to separate conduct and prudential regulation in shadow form in the first quarter of 2011.
The consultation invites views on this proposal in addition to plans to create:
• A new prudential regulator under the control of the Bank of England headed by a new deputy governor (the first of whom will be current Financial Services Authority chief executive, Hector Sants), which will be responsible for supervising the safety and soundness of individual financial firms.
• A new Consumer Protection and Markets Authority (CPMA) to act as a single integrated regulator focussed on conduct in financial markets
Commenting, Mark Hoban said: "The Coalition Government is delivering on its commitment to reform the financial system, to avoid repeating the mistakes of the recent financial crisis and to ensure that taxpayers are protected. Today is a crucial milestone in our programme of reform. To take this forward, we would welcome the input of everyone who has an interest, including regulators and the regulated community, to ensure that we get the design right."
Mar Hoban's speech can be found in full here:
http://mortgageintro.wpengine.com/mortgages/238063/5/Industry_in_depth/Mark_Hoban's_speech_in_full.htm
Responding to the announcement, Stephen Sklaroff, director general of the Finance & Leasing Association, said: "The Government is right to recognise that transferring consumer credit regulation from the OFT to the new Consumer Protection and Markets Authority would be a huge task, justified only if further consultation demonstrates real benefits from such a change. We look forward to responding to the Government's consultation document when it is published in the autumn."
