George Osborne has announced that the Bank of England will be charged with regulating the UK financial sector, meaning the Financial Services Authority will cease to exist.
The Chancellor’s Mansion House speech also revealed that former head of the Office of Fair Trading Sir John Vickers will head an independent commission that will look into the potential break-up of the big banks. Osborne also used the speech to support many of the conclusions reached by the Future of Banking Commission, which featured MPs from the three main political parties, as well as financial experts from the City, and Which? chief executive Peter Vicary Smith.
The Future of Banking Commission heard evidence from Bank of England governor Mervyn King, and other industry heavyweights. These include Financial Services Authority head Lord Adair Turner and former chair of Barclays Martin Taylor. Taylor will sit on the new commission alongside the Financial Times’ Martin Wolf, Bill Winters, formally of JP Morgan and ex-gas industry regulator Clare Spottiswoode, who sat on the Future of Banking Commission.
The need to separate retail and business banking in order to provide solid protection to consumer deposit accounts was a key finding of the Future of Banking Commission, and one that the new Commission will investigate further.
Consumers’ voices must be heard
The new commission is charged with ensuring that the banking sector employs greater accountability so that consumer trust in the City can be reestablished. George Osborne said: ‘No one was controlling levels of debt, and when the crunch came no one knew who was in charge.’
Which? chief executive Peter Vicary Smith said: ‘Consumers need a regulator that proactively stands up for their rights and that leaves financial services firms under no illusions that severe consequences await those who mistreat their customers. We look forward to working with the Government to ensure this new regulatory structure gives consumers the protection they deserve.’
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