Death of the Tripartite
Addressing Mansion House last night the chancellor claimed the changes proposed to the banking regulatory system would have eased the impact of the current global financial crisis. This is a brave claim and in this time of high budget deficit the plans are a brave move.
Essentially it seems things will remain steady until 2011 but by 2012 there will have been sweeping changes. The FSA as we know it will no longer exist. Instead of the current tripartite system involving the FSA, the Bank of England and the Treasury, there will instead be only one party with overall responsibility for regulation – the buck stops with the Bank of England. The creation of a new powerful Financial Policy Committee at the Bank of England is set to boost the central bank’s powers.
The transition from FSA to Bank of England will be overseen by Hector Sants who in 2010 will become the new prudential regulator.
For consumer protection and crime prevention there will be a new Consumer Protection Agency and an Economic Crime Agency (just for those who still hanker after some form of a tripartite system).
There were also last night strong indications that the Bank Rate will remain relatively unchanged for the next two years.
Joanne Smith, Chief Executive and Creative Officer at The Consulting Consortium (TCC) was quoted as saying “The news of the death of the FSA might be manner from heaven for some firms who believe that the FSA new style of intrusive regulation was over the top however in reality the new standards will be no less onerous!”
So out with the old and in with the, well, older in the case of the Bank of England. With Hector Sants and Mervyn King still in charge the people remain the same but only time will tell what the new system really means for all of us involved in financial services. One certainty seems to be that there will be higher capital and liquidity requirements for banks.
