A Conservative government would abolish the Financial Services Authority (FSA), give more power to the Bank of England and set up a new consumer watchdog.
Publishing a new paper revealing the Tory party’s banking reform strategy, the shadow chancellor George Osborne levelled blame for the ongoing banking crisis squarely at the Financial Services Authority and revealed that the Conservatives would give more power to the Bank of England – although the Bank’s governor would lose some of his personal authority.
In From Crisis to Confidence: Plan for Sound Banking the Conservatives detail how the Bank will be responsible for regulation, and given the authority to ‘call time on debt’ in the economy. The Bank would be empowered to control the pay structure, risk, complexity and size of banks, building societies and other financial providers.
Real consumer representation
The white paper also lays out plans to establish a new consumer watchdog – the Consumer Protection Agency – that would be ‘much more consumer-orientated, transparent and focused than the FSA’. The proposed agency would contain ‘at least two members who are specifically appointed to ensure that the consumer perspective is fed into the whole of the Board’s policies.’
Consumer representation on the FSA, and any replacement board, is a move Which? is campaigning on. More than 90 MPs have signed a Parliamentary motion calling for a consumer voice at the regulator, and hundreds of people have sent a Which? generated email to their MP asking them to support the motion.
Other proposals include plans to make a senior Treasury minister responsible for protecting British interests in Europe, and require them to spend as much time in Brussels as required. The Conservatives would also instruct the Office of Fair Trading and the Competition Commission to examine the effects of consolidation in the banking sector.
Mr Osborne said: ‘The public now have a clear choice. If they want to change the way their banks are regulated they need to change the government.’
The Conservatives economic plan has been criticised by both Labour and the Lib Dems. Treasury minister Lord Myners said the shadow chancellor had revealed ‘considerable naivete’. He added: ‘George Osborne is going to cause considerable disruption if he is ever given the opportunity to implement these plans.’
Vince Cable, the Lib Dem Treasury spokesman said: ‘The Tories are obsessed by moving around bureaucratic furniture, sort of chopping and changing the way institutions are run. What we need to focus on is the way regulation works, learning some of the lessons of this disaster.’
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