By Jim Pickard
“Never again” is the universal cry as British policymakers begin to repair financial regulation after the credit crunch.
George Osborne, the man who hopes to be Britain’s next chancellor, wants to abolish the Financial Services Authority, the City watchdog, and hand most of its powers to the Bank of England, such as the job of supervising UK banks and building societies. In parallel there would be a new “consumer protection agency” created from the rump of the FSA.
Are the Tories right – will scrapping the FSA prevent future catastrophe? And does Britain’s financial services industry need a more extended overhaul? In the posts below, FT writers and outside experts set out their views on revamping City regulation. What do you think? Click the “comment” button to take part.
Keep the financial watchdog – but on a tight leash
Martin Jacomb: The FSA’s remit could be left as it is, but it need not remain independent. The right course is to make it a subsidiary of the Bank, which would then be in a position to know that prudential supervision was being properly conducted.
Why the Bank might not be the right regulator
Andrew Large: So the first goal is to create a systemic policy process to prevent the build-up of excessive leverage. It is a pity that in 1997, when the Bank of England was given monetary policy independence, little was done in the systemic and financial stability area.
Scrapping the FSA: a cheap organisational shift
Paul J Davies: With weak public finances limiting their room for manoeuvre at every turn, abolishing the FSA is a cheap philosophical and organisational shift that also gives them a stick with which to beat the new opposition. (Although if history is any guide, that lot will be so busy bashing each other they will hardly notice.)
The FSA: doing two jobs with one set of tools
Simon Gleeson: Reshuffling deckchairs has an unreasonably bad name – when the weather changes it can be a useful and productive activity. Consequently, even if rearranging financial regulatory responsibilities among existing institutions would constitute deckchair-shuffling, it still deserves serious consideration.
Get the job done
Angela Knight: Of greatest importance is that the [regulatory] arrangements are clear and coherent, and that the authorities work seamlessly together so the outcome brings balanced, effective regulation, giving confidence to customers and ensuring an internationally competitive industry.
George Osborne, clap-trapper
Paul Murphy of FT Alphaville: Osborne’s headline-grabbing promise to scrap the FSA betrayed naivety. Does he really think we can just dismantle the infrastructure of Britain’s financial regulator and then reconstruct it in some supposedly firm old hands and, hey presto, everything will be fixed?
Insiders cannot provide answers on finance
Philip Augar: The combination of misplaced government policy and irresponsible banking was what caused the system to fail. That those involved in the inception of the financial services industry’s problem should now lead the public debate on its solution is astonishing.