The Bank of England is to be given more power after the Government announced that the FSA will be abolished by 2012.
Chancellor George Osborne announced yesterday that he Financial Services Authority will cease to exist and power will be transferred to the Bank of England as well as several other regulatory bodies, which are to be newly created.
Among those will be the Consumer Protection and Markets Authority, which will regulate every firm providing financial services to consumers.
But the most power will fall under the Bank of England, seeing it transformed into one of the most powerful regulatory bodies in the world with responsibility for both monetary policy and financial regulation.
Chancellor George Osborne announced the plans yesterday as he criticised the FSA for their part in the credit crunch.
“At the heart of the crisis was a rapid and unsustainable increase in debt that our macroeconomic and regulatory system utterly failed to identify let alone prevent,’ he said.
“The Bank of England was mandated to focus on consumer price inflation to the exclusion of other things. The Treasury saw its financial policy division drift into a backwater. The FSA became a narrow regulator, almost entirely focussed on rules based regulation.
“No-one was controlling levels of debt, and when the crunch came no one knew who was in charge.”
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