Centre for Policy Studies

In a new report published by the Centre for Policy Studies, Sir Martin Jacomb, an external Director of the Bank of England for 10 years, shows that:

• Gordon Brown's desire for ultimate control over the regulation of the financial services industry has ended in failure;
• The Tripartite Arrangement (which created the FSA and removed the Bank of England's role in supervising individual banks) has been a disaster. In particular, it meant that the Bank lost its most important weapons in supervising the banking system, having neither influence over, nor information on, the behaviour of banks;
• The Tripartite Arrangement must be recast.

In Re-empower the Bank of England, Sir Martin argues that effective regulation of financial services will in the future depend on:

• The FSA becoming a subsidiary of the Bank of England;
• Creating a Systemic Policy and Risk Committee (SPARC) on the model of the Monetary Policy Committee to take responsibility for the stability of the financial system as a whole;
• Giving the Bank of England sole responsibility for the managing the tensions between its three subsidiaries (the MPC, SPARC and FSA).

The report is available as a free download here

There is coverage of the report in The Financial Times, The Independent, The Times, The Guardian, The Daily Mail, The Daily Telegraph and The Daily Express,