The Financial Services Authority created by Gordon Brown in his Chancellor days is to be scrapped, and its powers passed to the Bank of England.
The Chancellor said he had ‘profound doubts’ over the ability of the current system to prevent a repeat of the financial crisis, claiming that no one organisation had been controlling the levels of debt.
Bank of England
As well as absorbing the FSA, the Bank of England is to be given sweeping new powers to prevent another debt-fuelled crash.
The newly created Financial Policy Committee, chaired by Mervyn King, will be responsible for watching out for any threats to economic stability.
Consumer Protection and Markets Authority
The government plans to create a Consumer Protection and Markets Authority that will regulate financial firms that provide services to consumers.
This won’t just exist to safeguard consumers, the Chancellor claims this is necessary to protect the reputation of the country on the global stage.
Retail and investment banks
George Osborne revealed he plans to introduce a bank tax and also attempt to curb, what he considered to be excessive bank bonuses and pay.
We all knew that the coalition Government intended to review the banking system, to consider whether or not to split retail and investment banking, and George Osborne is now creating a new commission to do exactly that.
The independent commission will report its findings next year.