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08/07/2009
Darling Outlines Tougher Banking Regulations
The Government has announced plans to overhaul the way the City of London is regulated to prevent a further financial crisis.
Chancellor Alistair Darling set out his White Paper on financial regulation today, and confirmed banks would be subject to tough new laws, while consumers would be given more protection.
The Chancellor said the Financial Services Authority (FSA) would be handed more powers to deal with banks who take-risks, adding that misconduct would be penalised.
Speaking to Parliament, Mr Darling said: "Financial institutions in many countries took on too much risk.
"It is also clear that some financial institutions had little appreciation of what was going on inside their businesses."
Some of the key proposals in the Paper, included a national money advice line - funded by banks - which would give more assistance to consumers, as well as the FSA and Office for Fair Trading ensuring that new players can enter the banking market.
A new Council for Financial Stability would also be set up, made up by the FSA, the Bank of England and the Treasury. They would meet up regularly and report on the systematic risks to financial stability.
The Chancellor said: "We also need banks and institutions that are better managed.
"We need a change of culture in the banks and their boardrooms, with pay practices that are focused on long-term stability, and not on short-term profit."
Mr Darling added: "The FSA now has powers to penalise banks if their pay policies create unnecessary risks and are not focused on long-term strength of their institutions."
Shadow chancellor George Osborne, however, criticised the reforms calling them a "totally inadequate response" to the financial crisis.
He said: "After two years of talk in the Treasury, we will have a council that will bring together the FSA, Treasury and Bank of England. I thought that was what the tri-partite system was. The Chancellor should have come here to bury the tri-partite system, not to praise it."
He further dismissed the plan, saying: "This White Paper ducks every difficult questions that needs to be addressed. It is more of a white flag than white paper."
"The next Conservative government will abolish the tripartite system and put the Bank of England in charge of prudential supervision," Mr Osborne told parliament.
(JM/BMcC)
Chancellor Alistair Darling set out his White Paper on financial regulation today, and confirmed banks would be subject to tough new laws, while consumers would be given more protection.
The Chancellor said the Financial Services Authority (FSA) would be handed more powers to deal with banks who take-risks, adding that misconduct would be penalised.
Speaking to Parliament, Mr Darling said: "Financial institutions in many countries took on too much risk.
"It is also clear that some financial institutions had little appreciation of what was going on inside their businesses."
Some of the key proposals in the Paper, included a national money advice line - funded by banks - which would give more assistance to consumers, as well as the FSA and Office for Fair Trading ensuring that new players can enter the banking market.
A new Council for Financial Stability would also be set up, made up by the FSA, the Bank of England and the Treasury. They would meet up regularly and report on the systematic risks to financial stability.
The Chancellor said: "We also need banks and institutions that are better managed.
"We need a change of culture in the banks and their boardrooms, with pay practices that are focused on long-term stability, and not on short-term profit."
Mr Darling added: "The FSA now has powers to penalise banks if their pay policies create unnecessary risks and are not focused on long-term strength of their institutions."
Shadow chancellor George Osborne, however, criticised the reforms calling them a "totally inadequate response" to the financial crisis.
He said: "After two years of talk in the Treasury, we will have a council that will bring together the FSA, Treasury and Bank of England. I thought that was what the tri-partite system was. The Chancellor should have come here to bury the tri-partite system, not to praise it."
He further dismissed the plan, saying: "This White Paper ducks every difficult questions that needs to be addressed. It is more of a white flag than white paper."
"The next Conservative government will abolish the tripartite system and put the Bank of England in charge of prudential supervision," Mr Osborne told parliament.
(JM/BMcC)
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