FSA to get more power

Jun 26 2009 By Andrew Mernin

THE Treasury is planning to beef up the role of the City watchdog in an apparent snub to the Bank of England, it has been reported.

An White Paper on banking reform will give the Financial Services Authority (FSA) a stronger role in banking supervision, according to a report in the Financial Times.

The Bank of England was given formal statutory responsibility for financial stability this year but it will reportedly share this with the FSA under the new guidelines.

The move from the Treasury - which is set to publish the White Paper the week after next - would make it easier for the FSA to question the practices of banks.

Chancellor Alistair Darling is said to believe the watchdog should be responsible for ensuring that the business models of individual banks should not threaten the system as a whole.

Bank Governor Mervyn King, who has complained publicly that he does not have the powers to discharge his new responsibilities, told MPs this week he had not been consulted on the White Paper and had not seen a draft.