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June 16, 2010

UK government confirms plans to axe FSA

The UK government is abolishing the existing
tripartite financial regulation regime, replacing the Financial
Services Authority (FSA) with a new subsidiary of the Bank of
England.

The current FSA chair, Hector Sants, will be
the first president of the new regulator.

There were concerns that during the financial
crisis, the tripartite consisting of the FSA, the Bank of England
and the Treasury led to confusion about which organisation was in
charge of controlling debt levels.

The reshuffle greatly increased the Bank of
England’s powers.

The regulatory change is due to be completed
by 2012, which PricewaterhouseCoopers UK director David Kenmir said
seems very optimistic.

Kenmir said the regulation change will put the
industry under significant strain, particularly due to existing
deadlines regarding Solvency II, the Retail Distribution Review and
Basel.

Kenmir is also concerned about the lack of
clarity from the government and stressed the importance of a clear
roadmap.

Ernst & Young UK regulatory and risk
management partner John Liver said the authorities and industry
face a daunting programme of new regulatory policy and
implementation and need to keep their eye on the ball to ensure the
programme is successfully delivered.

 

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