But while their attacks are uncomfortable for the Government, which has said it wishes to stick to the broad outlines of the present system, several regulators are also fighting Labour Party proposals that would fold their organisations into the Securities and Investments Board. The chief executive roles would be no more than division heads at the SIB, and observers say there are signs already of top regulators jockeying for position in the new structure.
Only a year ago Phillip Thorpe, head of Imro, the fund management regulator, told the Treasury and Civil Service select committee that SIB's role was untenable because of the overlap in its responsibilities. Labour's "super- SIB" is not the only upheaval in prospect, because decisions have to be taken about what to do with banking and insurance regulation.
At least two of the senior regulators, Richard Farrant, chief executive of the Securities and Futures Authority, and Colette Bowe, his counterpart at the Personal Investment Authority, have endorsed a system quite different to Labour's proposals, which would instead split regulation in two.
They back research published yesterday by Michael Taylor, an academic and a former employee of the Bank of England, in which he calls for two regulators to be set up - a Financial Stability Commission and a Consumer Protection Commission.
The FSC would be responsible for the prudential supervision of financial institutions such as banks, insurance companies and fund managers. Prudential supervision includes the financial soundness of the institution and fitness and propriety of senior management.
The CPC would, in contrast, ensure relationships between financial institutions and retail customers were fair and it would be be responsible for the detection and prosecution of insider dealing and market manipulation. While the paper builds on ideas developed by Mr Taylor in the past, what is different this time is that they are supported by Mr Farrant and Ms Bowe. In a speech earlier this year, Ms Bowe said: "I propose that financial regulation is different from conduct of business and in the future there would be effective gains from organising them separately."
She also called for the preservation of one of the features of the current regime, the separation between retail and wholesale markets.
Mr Farrant said a structure such as that proposed by Mr Taylor seemed to be "going towards the right logical approach". He accepted that the SFA would be carved up in any reform.
Imro is also expecting upheaval, though it is cautious about what has come to be known as Mr Taylor's twin-peaks approach of having two specialised bodies.
"It's a contribution to the debate but it's not the only option," said Robin Clark, director of regulatory relations at Imro. The separation between wholesale and retail raised the question of whether a system of two bodies would develop more effective regulation.
One regulatory source argues that dividing the system between wholesale and retail is too simplistic, given the tremendous overlap. For instance, merchant banks, whose main role is in the wholesale markets, sell unit trusts to retail investors.
Mr Taylor does not call for banking regulation to be taken away from the Bank of England, which is resisting calls to give up its supervision of banking. The Bank argues it is best placed to monitor banks.Reuse content