Chancellor of the Exchequer George Osborne will today hail the “resetting” of the U.K.’s financial services regulatory system with a new banking agency with greater powers to replace an “old failed regime” overseen by the Financial Services Authority.
The new Prudential Regulatory Authority is a subsidiary of the Bank of England with responsibility for ensuring effective regulation of firms that manage complex risks on their balance sheets, Osborne will say. He will reaffirm the government’s commitment to learning the lessons of the past and protect taxpayers from bank failures in the future.
“The changes coming into effect today are the start of resetting the system of financial regulation in our country,” Osborne will say, according to comments issued by his office in advance. “They do away with the discredited system that failed to sound the alarm as the financial system went wrong.”
The FSA, the brainchild of then-Chancellor of the Exchequer Gordon Brown, was created in 1997 after scandals in the 1990s such as fraud cases at Barings Plc and Bank of Credit & Commerce International dented confidence in London’s finance industry. The scandals of the 2008 credit crunch undid the FSA, however, as lawmakers criticized the regulator for failing to prevent the rescues of Northern Rock Plc, Royal Bank of Scotland Plc and Lloyds Banking Group Plc.
Osborne will speak in central London alongside Bank of England Governor Mervyn King at the launch of the new authority. It is part of a new regulatory system introduced this week which also includes the Financial Policy Committee, which is responsible for protecting and enhancing stability as a “macro- prudential” authority, and the Financial Conduct Authority, to ensure that financial services businesses advance the interests of all consumers and market participants.
This new system “puts the Bank of England back in charge and will help ensure a strong, safe and successful financial system in Britain,” Osborne will say.
To contact the reporter on this story: Makiko Kitamura in London at firstname.lastname@example.org
To contact the editor responsible for this story: Phil Serafino at email@example.com