Speaking at The Lord Mayor’s Dinner, George Osborne said the Bank of England will cover the micro and macro financial supervision and he will create a Consumer Protection and Markets Authority in place of the FSA. He also noted the UK has one of the highest budget deficits in Europe.
Speaking at The Lord Mayor’s Dinner for Bankers & Merchants of the City, George Osborne highlighted the following points:
· The future of the UK banking and financial services has to be settled.
· It is now accepted that the centrepiece of the new global standards for bank regulation will involve higher capital and liquidity requirements, and that bank capital requirements should respond to the cycle. This is what the G20 agreed to last year, but the actual standards have not yet been agreed.
· The markets are already anticipating what they might be, and the banks are building up larger reserves to prepare themselves.
· Confirmation that the Government will abolish the tripartite regime, and the Financial Services Authority will cease to exist in its current form. We will create a new prudential regulator, which will operate as a subsidiary of the Bank of England. It will carry out the prudential regulation of financial firms, including banks, investment banks, building societies and insurance companies.
· The creation of an independent Financial Policy Committee at the Bank, which will have the tools and the responsibility to look across the economy at the macro issues that may threaten economic and financial stability and take effective action in response. The establishment of a powerful new Consumer Protection and Markets Authority will also be settled.
· It will regulate the conduct of every authorised financial firm providing services to consumers.
· It will also be responsible for ensuring the good conduct of business in the UK’s retail and wholesale financial services, in order to preserve our reputation for transparency and efficiency as well as our position as one of the world’s leading global financial centres.
· The process will be completed in 2012.
© HM Treasury
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