FSA could remain in place under British coalition government

13 May 2010

The Financial Service Authority (FSA) may remain under a Conservative and Liberal Democrat coalition government.

An unnamed aide to George Osborne, the new chancellor of the exchequer, told the Financial Times that the regulator may well survive the planned overhaul of the financial system.

The Conservative party originally claimed that it would remove the FSA, instead shifting regulatory power to the Bank of England and its governor Mervyn King.

In an interview with the BBC last year, Mr Osborne said that it would have been wrong to continue with a system of financial regulation which “failed so spectacularly”.

However, some figures in the City are reported to have feared that removing the FSA would be too much of an upheaval for an economic system still in recovery.

Meanwhile, Mervyn King has called for the new government to undertake “careful thought and discussion” before deciding on the set up of the new regulations.

“Right through this I have always said that what concerns me most is what the nature of regulation is, not who does it. I can reiterate that today. I have never made any pitch for any particular responsibility but we are concerned about its nature.”

According to the FT, the FSA would still exist but be overseen by the BoE as part of the new regulatory system.

By Jim Ottewill

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