Tories plan to abolish Insurance regulator of its powers

George Osborne, the Shadow Chancellor of the Exchequer, has set out plans to strip the Financial Services Authority (FSA), of its key function of regulating the UK's financial services industry.

During a speech on 20th July, the Shadow Chancellor claimed the regulation system set up by Gordon Brown had failed. And he launched a white paper on financial regulation, entitled ‘From crisis to confidence: Plan for sound banking'.

The FSA was set up as an independent organisation and is responsible for regulating financial services industry in the UK. It has been criticised by some observers recently for being weak and inactive in allowing irresponsible banking to precipitate the credit crunch. Under the plans, the Bank of England would be given responsibility for the regulation of all banks, building societies, and other significant financial institutions including insurance companies.

With the Bank of England in charge of regulation, the Conservatives plan to create a strong new Consumer Protection Agency (CPA) with the responsibilities to protect the consumer that are currently divided between the FSA and Office of Fair Trading. This single body, they argue, will be able to stand up for consumers and ensure they are treated fairly. The CPA would have new powers to name and shame institutions that break the rules or who receive a lot of consumer complaints.

At the launch of the whitepaper, Leader of the Conservative Part, David Cameron said, "The decisions that led to (the banking) crisis represent a policy failure of historic proportions. We now need deep, wide-ranging reform that matches both the magnitude of the crisis and the scale of the hardship inflicted on the British public."

Osbourne stressed, "If we can bring stability to our banking system, and reward long-term returns over short term bonus chasing, then we will have put in place a key foundation stone of an economic recovery."

19 August 2009