British Chancellor of the Exchequer George Osborne has announced sweeping changes for stronger regulation of the UK banking system in order to avoid a banking meltdown like 2007 that plunged the country into the worst financial crisis.
Osborne on Wednesday outlined a new regulation policy to reform the financial system by 2012. “The plan I have set out tonight represents a fairer settlement in which banks support the people, instead of the people bailing out the banks.”
Banks were supervised by the Treasury, Bank of England and Financial Services Authority (FSA). Now, the Bank of England will get more powers to regulate the financial sector.
A new regulator will replace the FSA and report to the Bank of England which will have oversight of banks, investment banks, building societies and insurance firms. The regulator will act as an early-warning system for future financial crises.
In addition, an independent financial policy committee will be created at the Bank of England to look at macro issues.
A new, powerful consumer protection and markets authority also will also be established to regulate the conduct of every authorised financial firm providing services to consumers.