Vince Cable has today questioned the sense of giving the FSA a bigger role in the wake of the Northern Rock fiasco.
The Liberal Democrat Shadow Chancellor says the Government “should be firing the chair of the FSA, not giving this failed regulator more responsibility”.
Cable was responding to the findings today of a Treasury Select Committee report, which concluded the FSA was guilty of ‘systematic failure’ over Northern Rock.
Chancellor Alistair Darling this morning said the FSA, not the Bank of England, would be granted extra powers to avert similar chaos should other banks run into trouble.
But Cable has hit out at the plans. “It is baffling that the Chancellor now seems intent on giving it [the FSA] a bigger role, rather than the Bank of England.
“The Government should be firing the chair of the FSA, not giving this failed regulator more responsibility. Immediately after being reappointed as Governor, Mervyn King is being undermined because powers are being shifted elsewhere.
“The Chancellor seems focused on how to treat the symptoms of banking failures, rather than addressing the causes.
“The head of markets at the Bank of England has been advocating more active intervention to stop asset bubbles forming, but there is no sign at all that the Government has grasped this issue.
“Improved depositor protection is welcome, but not all problems in the financial sector can be solved by regulation alone. Ministers must work to make the whole banking sector more competitive to help the millions of customers who currently pay excessive charges and get a poor service in return.
“By breaking down the barriers which stop new and innovative companies entering the banking market and by letting banks fail, we can drive down costs and improve business practices.”
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