FSA to Lose Key Role in Massive Shake-Up; Treasury Sharpens Its Axe as City Regulator Is Stripped of Consumer Education Powers; FSA in Huge Shake-Up
Byline: DAN ATKINSON
THE chief City regulator, the Financial Services Authority, is to lose its key consumer education role under a shake-up to be announced this week.
A separate agency will be spun off and given the job of providing independent financial advice to anyone who wants it.
This will be free to the customer and paid for by a levy on the banks and other financial institutions.
The move to set up a standalone Consumer Education Agency could prove the first step in the dismemberment of the FSA, which was set up in 1997 by then Chancellor Gordon Brown.
Already, the Conservatives have suggested they would hive off to the Serious Fraud Office its role in the criminal prosecution of insider dealing and other financial crimes. They have also hinted that the FSA's consumer protection functions could be handed to the Office of Fair Trading and bank supervision returned to the Bank of England.
If all these changes happened, there would be little for the FSA to do, beyond regulating insurance companies and smaller institutions.
The new agency is expected to be outlined in the Financial Services Bill, to be presented to Parliament on Thursday. A Treasury spokesman said last night that the job of financial education tended to get overlooked in the hurly-burly of the FSA's main tasks of supervision, enforcement and pursuit of wrongdoers.
'It gets lost in the mixture,' he said. …