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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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