FSA and govt 'in standoff over new banking rules'

The British government and the Financial Services Authority (FSA) are embroiled in a standoff over a new ruling designed to make it easier for new banks to establish themselves, it has emerged.

Sources familiar with the matter have informed Sky News that there is a disagreement between the administration and the country's primary regulator about the length of time the FSA should take to grant a banking license to newcomers to the industry.

The Conservative-Liberal Democrat alliance has outlined its determination to increase the amount of competition and consumer choice in the banking industry in the wake of the global financial slump.

And, according to the insiders, the Treasury wants the FSA to fast-track viable companies on to the high street by authorizing them to begin operating three months after they have applied.

However, the regulator is apparently insistent that such a timetable is unrealistic and unworkable, leading to deadlock in the talks.

By Gary Cooper