New Financial Services Bill Criticised

Ed Balls, the shadow chancellor, has criticised elements of the new financial services bill which is currently going through Parliament.

The bill will break up the FSA into two regulators. The Financial Conduct Authority will oversee client conduct and police wholesale markets whilst the Prudential Conduct Authority will supervise banks’ financial resource becoming a subsidiary of the Bank of England.

Mr. Balls is concerned about the power to be vested in the governor of the Bank of England. He supports calls for a more robust supervisory body to oversee this position. He also wants to see the Chancellor of the Exchequer given powers to communicate directly with the two deputy governors responsible for monetary policy and bank supervision. At present the Chancellor will only be able to liaise directly with the governor.

The bill makes the Chancellor responsible for co-ordinating the response to a financial crisis.