The board's regulation of the building societies and the life insurance arms of the banks has proved a stumbling block in the creation of the Personal Investment Authority, the body intended to take on the watchdog role for private savers and investors.
Mr Large's report is about to be delivered to the Chancellor of the Exchequer after repeated delays, nearly two months late on the original deadline. Last Tuesday the SIB expected to hand it over by the end of the week, but it was still 'on the verge' of delivering it by Friday evening. The Treasury then has to decide whether and when to release it.
Besides restricting the SIB's future role the review, which runs to more than 100 pages, will not recommend any dramatic change to the system of investor protection established under the 1986 Financial Services Act, sources say.
This may lead to criticism since Norman Lamont asked Mr Large to conduct the review in the aftermath of the Robert Maxwell pension fund debacle. The Government is reluctant to become embroiled once again in this complicated area. Recognising this, the review will not recommend any new primary legislation.
Mr Large is also expected to say that the SIB does not want to take overall responsibility for insider dealing. Andrew Hugh Smith, chairman of the Stock Exchange, has been pressing for a powerful new City enforcement body to cover insider trading and other market abuses. He has indicated he wants this to be attached to the SIB.
The SIB's primary role is to set standards and to ensure they are met by the self-regulating organisations such as Fimbra and Lautro, which carry out the bulk of the detailed regulatory work. But the SIB also acquired its own direct regulatory powers because of a desire to offer investment businesses a choice of authorising bodies.
Senior regulators, including Mr Large, are believed to regard this as a mistake. Mr Large has indicated that the investment community may have to accept less regulatory choice in return for a system that works more effectively.
The SIB is expected to restrict its role largely to policing the core rules, the broad requirements which all investment businesses are expected to meet. It may need to retain some powers of regulation to cater for organisations such as Reuters, which do not obviously belong to any of the SROs.
Since last November, when the Independent reported the SIB was seeking ways to compel the banks to join the PIA, some banks and building societies have softened their attitude towards the new body.
This was partly prompted by Mr Large's insistence that the PIA should seek a marked improvement in standards in the life insurance and savings markets. The banks and building societies were concerned they would have to pick up the cost of compensating the failures of much smaller firms of much lesser standing.
Mr Large made it clear that member firms of existing SROs should not be granted automatic admission into the PIA.
Sir Brian Jenkins, the Coopers & Lybrand partner and former Lord Mayor of London, has produced a report on standards for the PIA, which was made public on Friday. Although Sir Gordon Downey, the PIA's chairman, has said he agrees with the underlying principles - uncontentious demands for honesty, competence and cost-effectiveness - there is some concern that Sir Brian's detailed proposals are too bureaucratic.
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