Secret agenda for 'SuperSIB'

A long agenda, so far hidden from public view, lies behind Chancellor Gordon Brown's announcement earlier this week that the Bank of England's banking supervision role and the self-regulatory organisations within the City would be folded into an enlarged Securities and Investments Board.

Despite the fact that the Chancellor has promised a two-month consultancy period to gauge the views of the financial services industry, a number of issues have already been decided.

The Independent on Sunday has learned:

q The Bank of England will no longer be the lender of last resort. Instead the first port of call for an institution in trouble will be the SIB chairman, Howard Davies, who will then liaise with the Treasury over whether a bail- out is called for. The Bank will be consulted, but it will not take a lead role.

q The Personal Investment Authority, the Securities and Futures Authority and the Investment Management Regulatory Organisation, all creations of the 1986 Financial Services Act, will in effect be abolished from July. They may retain nominal titles in the new "SuperSIB", but will in practice be one body before the legislation enacting the new regulatory framework is put before Parliament later next year.

q The regulation of building societies will be included in SuperSIB, along with Lloyd's, the insurance market. The remit may also extend to other self-regulatory organisations that licence practitioners to conduct financial transactions, such as the Law Society and the Institute of Chartered Accountants.

q The Takeover Panel may also be included, along with some functions currently overseen by the Stock Exchange.

q A "super-ombudsman" is being considered, who would amalgamate the various consumer advocate offices dealing with pensions, insurance, and banking into one office with extensive resources to pursue complaints on behalf of the public.

However, it is understood that no plans have yet been made to introduce legislation to tighten the law relating to insider dealing, and Treasury sources insist that the activities of the Serious Fraud Office will not come under SuperSIB's remit.

Wide-ranging redundancies are expected among the staff in the existing regulators, with a premium on reducing duplication of effort and cutting the overall budget by at least 20 per cent. Regulatory organisations that have performed well are expected to win the lion's share of jobs in the new administration. The new SIB administration is thought to be looking at offices in the NatWest Tower and in Canary Wharf, with some functions devolved to regional offices.

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