The U.K. Financial Services Authority said that a government plan to split it into two divisions may risk temporarily reducing bank oversight.
The transition period would place “considerable pressures” on the regulator, reducing the staff time available for its day-to-day activities, the FSA said in a Sept. 27 submission to a U.K. parliamentary committee that was published this week.
“The FSA will be at risk of not delivering the same level of supervisory work as it currently does,” the London-based regulator said.
The U.K government plans to break up the FSA because it believes the regulator failed to properly police lenders in the years prior to the financial crisis. It plans to hand lender supervision to the Bank of England from the FSA.
The Treasury Select Committee will meet Oct. 19 to review the government’s plans. The Financial Times reported the FSA statement earlier today.
The FSA’s said the uncertainty over its future is “undoubtedly” posing staff retention and recruitment problems. The FSA’s staff turnover in the 12 months to the end of August was 7.6 percent, the highest since January 2009.
“The FSA is also facing retention pressures in key skills areas,” the regulator said.
The FSA said there is a risk that the U.K.’s ability to shape regulation in international bodies, including the EU’s planned European Securities and Markets Authority, could be “weakened” by the government’s plans.
To contact the reporter on this story: Jim Brunsden in Brussels at firstname.lastname@example.org
To contact the editor responsible for this story: Anthony Aarons at email@example.com.