Britain's Osborne to shake up financial regulation: reports

16th June 2010, Comments 0 comments

Britain's new finance minister George Osborne will Wednesday hand the Bank of England main responsibility for ensuring the country's financial stability as part of a regulatory shake-up.

Reports said Osborne would use his first annual Mansion House speech to business leaders to strip the Financial Services Authority (FSA) regulator of the role.

The body came in for harsh criticism for failing to properly carry out its duties during the 2007 to 2008 banking crisis.

While the FSA would continue to supervise individual banks, the body would be answerable to the Bank of England, which would be charged with stopping the build-up of risk in the economy, said the Financial Times.

When in opposition, the new chancellor advocated abolishing the FSA.

But he is thought to have watered down his proposals as part of the deal to bring his Conservative party into power last month in a coalition government, said the Daily Mail.

The Conservatives came first in the May 6 general elections but failed to win an outright majority, so were forced to form a coalition with the smaller Liberal Democrat party.

Both parties had to agree to compromise on a series of policies to finalise the deal.

Osborne is also expected to outline the details of a new banking commission, which will investigate whether Britain's banks should be split into separate investment banking and retail entities, said the Mail.

He will also confirm plans to introduce a new bank tax to make banks pay for the damage they caused during the financial crisis, said the FT.

© 2010 AFP

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