–BOE Financial Policy Committee To Get New Raft of Powers, Tools

LONDON (MNI) – Treasury Minister Mark Hoban set out in parliament
Thursday some of the details of the UK’s new regulatory system, with the
Bank of England taking over the reins of power and gaining a new
Financial Policy Committee to mirror its Monetary Policy Committee.

Hoban said the FPC would be responsible for looking at the
macro-economic and financial issues that may threaten stability and said
it would be given the tools it needs “to address the risks it
identifies.”

A new Prudential Regulation Authority is being set up as a
subsidiary of the BOE, and Hoban said the FPC would have the power to
ensure the prudential regulator implements its direction by taking
appropriate action.

Hoban said the FPC would be accountable to parliament in the same
direct way the MPC is, and indirectly through its accountability to the
BOE’s Court of Directors.

BOE Governor Mervyn King will chair the new committee, and its
member will include the BOE Deputy Governors for monetary policy and
financial stability, currently Charles Bean and Paul Tucker.

The new BOE Deputy Governor for Prudential Regulation, Hector
Sants, will also sit on the FPC, along with external representatives and
Treasury respresentatives.

It will take time for the new regulatory framework to be set in
place, with Hoban saying it would take two years to implement all the
relevant legislation to have them in place in permanent form.

Hoban said “an interim FPC will be set up by this autumn” in
advance of the relevant legislation being passed.

A consultation document will be available during the summer.

The PRA will also be chaired by King and Sants will be the CEO,
with Tucker also sitting on the board.

The third arm of the new regulatory structure is a new Consumer
Protection and Markets Authority, which will regulate retail and
wholesale firms and act as a “consumer champion.”

The CPMA is responsible for regulating the conduct of financial
services firms.

–London newsroom: 0044 20 7862 7491; email: ukeditorial@marketnews.com

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