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Osborne to give Bank more power | Osborne to give Bank more power |
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Chancellor George Osborne has confirmed that he will give the Bank of England the key role in regulating the UK financial sector. | Chancellor George Osborne has confirmed that he will give the Bank of England the key role in regulating the UK financial sector. |
Mr Osborne told the House of Commons that the current system of financial regulation had "failed spectacularly". | Mr Osborne told the House of Commons that the current system of financial regulation had "failed spectacularly". |
He added that Sir John Vickers, former head of the Office of Fair Trading, would look into the potential break-up of Britain's biggest banks. | He added that Sir John Vickers, former head of the Office of Fair Trading, would look into the potential break-up of Britain's biggest banks. |
Mr Osborne is due to give more details of his plans in a speech tonight. | Mr Osborne is due to give more details of his plans in a speech tonight. |
The existing regulatory systems, led by the Financial Services Authority, will be dismantled. | The existing regulatory systems, led by the Financial Services Authority, will be dismantled. |
Mr Osborne confirmed the plans in answer to a question from shadow chancellor Alistair Darling. | Mr Osborne confirmed the plans in answer to a question from shadow chancellor Alistair Darling. |
Mr Osborne said: "On the structure of regulation, 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." | Mr Osborne said: "On the structure of regulation, 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." |
FSA criticism | FSA criticism |
Before the general election, Mr Osborne had suggested he would abolish the FSA. | Before the general election, Mr Osborne had suggested he would abolish the FSA. |
It was thought possible that the regulator would be retained in some form, perhaps with a watered-down role of supervising individual banks. | It was thought possible that the regulator would be retained in some form, perhaps with a watered-down role of supervising individual banks. |
However, this "micro" supervisory role was put in doubt when Mr Osborne told the Commons that "this government is also committed to handing over micro-supervision to the Bank". | |
The FSA has come in for criticism for not doing enough to prevent or limit the crisis in the financial markets. | The FSA has come in for criticism for not doing enough to prevent or limit the crisis in the financial markets. |
Mr Darling told the Commons the changes would lead to confusion and risked creating "a dog's breakfast of a regulatory system". | Mr Darling told the Commons the changes would lead to confusion and risked creating "a dog's breakfast of a regulatory system". |
Casino banks | Casino banks |
Mr Osborne also announced that a commission to look into the possible break-up of the big banks would by chaired by Sir John, a former member of the Bank of England's Monetary Policy Committee. | Mr Osborne also announced that a commission to look into the possible break-up of the big banks would by chaired by Sir John, a former member of the Bank of England's Monetary Policy Committee. |
The independent commission will take at least a year to review whether casino-style investment banks should be split from deposit-taking institutions on the High Street. | The independent commission will take at least a year to review whether casino-style investment banks should be split from deposit-taking institutions on the High Street. |
Mr Osborne said that the commission would approach its task with an "open mind". | Mr Osborne said that the commission would approach its task with an "open mind". |
He is due to give his first Mansion House speech tonight, when he is expected to detail plans for a powerful new Financial Policy Committee at the Bank of England. | He is due to give his first Mansion House speech tonight, when he is expected to detail plans for a powerful new Financial Policy Committee at the Bank of England. |
This could involve creating a new post, such as a chief executive of financial regulation, with the status of a third deputy governor of the Bank. | This could involve creating a new post, such as a chief executive of financial regulation, with the status of a third deputy governor of the Bank. |
The chancellor may also confirm an intention to introduce a levy on banks, but full details are more likely to come in next week's budget. | The chancellor may also confirm an intention to introduce a levy on banks, but full details are more likely to come in next week's budget. |
Crackdown on crooks | Crackdown on crooks |
The BBC's business editor, Robert Peston, said that the FSA was effectively being broken up. | The BBC's business editor, Robert Peston, said that the FSA was effectively being broken up. |
"The part that's supposed to prevent banks taking dangerous gambles, which regulates and supervises them, will become a subsidiary or arm of the Bank of England. | "The part that's supposed to prevent banks taking dangerous gambles, which regulates and supervises them, will become a subsidiary or arm of the Bank of England. |
"And the bits that are supposed to protect consumers and crack down on crooks will be injected respectively into a new Consumer Protection Agency and an Economic Crime Agency," our correspondent said. | "And the bits that are supposed to protect consumers and crack down on crooks will be injected respectively into a new Consumer Protection Agency and an Economic Crime Agency," our correspondent said. |
Gordon Brown, made Chancellor when the Labour Party won the 1997 general election, created the FSA following criticism that the Bank had failed to sufficiently regulate the UK's financial system. | Gordon Brown, made Chancellor when the Labour Party won the 1997 general election, created the FSA following criticism that the Bank had failed to sufficiently regulate the UK's financial system. |
But there was criticism of Mr Brown's move from people who thought the change gave far too much power to a single body. | But there was criticism of Mr Brown's move from people who thought the change gave far too much power to a single body. |
Should the Bank of England play a greater part in regulating the UK financial sector? What would you like to see in next week's Budget? | Should the Bank of England play a greater part in regulating the UK financial sector? What would you like to see in next week's Budget? |