HM Treasury – A new approach to financial regulation: the blueprint for reform

A new approach to financial regulation: the blueprint for reform – Presented to Parliament by the Chancellor of the Exchequer by Command of Her Majesty, June 2011

  • “Responsibility for financial stability – both at the macro-level of the financial system as a whole, and the micro-level of individual firms – will rest within the Bank of England, in a new macroprudential body, the Financial Policy Committee, and a new micro-prudential supervisor, the Prudential Regulation Authority. Responsibility for conduct of business will sit with the new Financial Conduct Authority, with the mandate and tools to be a proactive force for enabling the right outcomes for consumers and market participants, including through the promotion of competition. And responsibility for the overall regulatory framework, and the protection of the public finances remains with the Treasury, and the Chancellor of the Exchequer. Creating these centres of regulatory excellence will enable each part of the framework to focus on what it knows best. Sitting within the Bank of England, the Financial Policy Committee will make judgements about risks to the overall stability of the financial system, and offer advice, recommendations, or binding directions to ensure that these risks are dealt with. Also within the Bank of England, the Prudential Regulation Authority will make judgements about the safety and soundness of individual firms, and will take supervisory and regulatory action to ensure that firms take necessary steps. And the Financial Conduct Authority will make judgements about risks to consumer protection, competition and market integrity and have new powers to take action. This clarity of focus will mean that accountability – to Parliament, the Government, and to the wider public – is clear.”
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