It pleased no one. Regulation should be complementary to the business process and not a hindrance. It should give consumers and public alike confidence in the integrity of the system. In the global economy, where markets are changing every day, where innovation and diversity are essential, the need for a new regulator that has power and flexibility has never been greater. The objective of the reform is again to enhance transparency and improve accountability through a simpler framework for the industry as a whole.
Many firms now offer a wide range of financial services.
The Bank of England of course retains responsibility for the stability of the financial system as a whole. There is another step in the modernisation of the old system. Clear divisions of responsibility between the Treasury, the Bank and the FSA are set out in a new memorandum of understanding, which was published last year and which is available in the Library of the House. The memorandum is based on principles of clarity, transparency, elimination of duplication and regular exchange of information between the three institutions. The memorandum also establishes a standing committee which will meet on a regular basis, and ensure an appropriate and co-ordinated response to any failure or collapse in the future.