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January 4, 2008

FSA to receive additional powers

by Gill Montia

Story link: FSA to receive additional powers

In the coming week, the Chancellor of the Exchequer, Alistair Darling, is expected to reveal plans to give the Financial Services Authority additional powers.

These could include the power to seize and protect cash deposits and gain access to information to assess a bank’s liquidity position.

The changes are aimed at preventing another run on a UK bank and should answer some of the criticisms levelled at both the Chancellor and the FSA over the Northern Rock crisis.

The proposals will be published after a Treasury Select Committee hearing to be held next Thursday. A period of consultation will follow with new legislation expected in May.

The Chancellor will also be introducing higher deposit guarantee levels to ensure that savers are protected.

The level of guarantee is expected to increase from £35,000 to around £50,000, which would provide full cover to around 98% of savers.

At the same time, Mr Darling is reviewing the way in which the Treasury, the Bank of England and the FSA work together.

Some commentators are suggesting that this will result in the Chancellor gaining authority over the other two institutions.

 

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