Plans to overhaul financial regulation are in danger of being rushed in before they are properly thought through, MPs warned yesterday. The Government plans to do away with the tripartite system in which the Financial Services Authority, the Bank of England and the Treasury share responsibility for regulating the City.
It has drafted plans to create a "twin peaks" system, which involves scrapping the FSA and making the Bank a "super-regulator", with responsibility for overseeing financial stability and the health of companies. The Government aims to have legislation in place in mid-2011 and the new system completed by 2012.
But the Treasury Select Committee warned it should not be rushed in to meet an "ambitious timetable" and said that more time may be needed to take in any recommendations made by the Independent Commission on Banking.
Treasury Committee chairman Andrew Tyrie said: "It is vital to maintain the momentum for reform, but there is no point in flawed change."
Under the new plans, the FSA will be split into a Prudential Regulation Authority, operating under the Bank, and a Consumer Protection and Markets Authority. There will also be a Financial Policy Committee, again within the Bank. The committee raised concerns that the Bank in its expanded role as a "super-regulator" should remain accountable and called for more independent members on the FPC.