The Government said today it will undertake a consultation period before setting up three new bodies as part of a radical shake-up of financial services regulation.
Speaking in Parliament today, financial secretary to the Treasury Mark Hoban said there will be a consultation by the end of July as he unveiled details of the new system.
Primary legislation detailing the changes to the UK's new regulatory framework will take two years to implement.
He confirmed a new Prudential Regulation Authority will be established as a subsidiary to the Bank of England and chaired by the Bank's governor Mervyn King with Hector Sants as CEO. It will be accountable to Parliament and have a clear remit.
The new Financial Policy Committee (FPC), also accountable to Parliament, will have responsibility for macro-economic regulation. An interim FPC will be established in the autumn and a consultation document on the body will be available during the summer.
A third body, the Consumer Protection and Markets Authority (CPA), will also be established to monitor advisory firms among others. This will play a "pre-active role as a consumer champion", Hoban says. Its remit will include the FSCS and FOS.
Summing up, Hoban said the Government's goal is to "radically improve financial regulation in the UK and deliver best possible practice for consumers".
Hoban said the "fundamental flaws" of the previous regime had undermined economic stability.
The tripartite system, established by Gordon Brown in 1997, had "failed spectacularly" to ensure financial stability.
"We have paid a high price for the previous Government's failings," he said.
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