The coalition government initially said it would transfer these regulatory powers to a new body known as the Economic Crime Agency (ECA).
However, the authorities has decided to back track on its previous proposals - the powers are now expected to remain with the independent regulatorâs replacement, the Consumer Protection and Markets Authority (CPMA).
âAfter much consideration we have decided that for the moment the FSA's powers of prosecution will lie with the new CPMA rather than the new economic crime agency," the Treasury said in a statement.
"The government recognises the importance to the City of London of a strong markets division being established within the CPMA and giving it these powers will make it a stronger and more credible regulator. The government remains committed to the creation of a strong and powerful new ECA to tackle serious economic crime coherently and effectively.â
According to the authorities, the FSA is to be removed during 2012 with two regulatory bodies to be created in its place.
By Jim Ottewill