Financial Services Authority’s future in doubt again

Fresh doubts over the future of the Financial Services Authority have emerged as discussions continue over the future of the City regulator, which was earmarked for abolition in the Conservative manifesto.

In the immediate aftermath of the creation of the new government, the Liberal Democrats were thought to have convinced the Conservatives to retain the FSA, but subsequent announcements are raising fresh doubts about whether it has been reprieved.

The coalition’s “programme for government” today contained a pledge to create a single agency to tackle white-collar crime – one of the FSA’s current responsibilities.

The coalition’s agreement did not specifically mention abolishing the FSA but contains a promise to “bring forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation”.

Asked about the FSA, the chancellor, George Osborne, indicated that discussions were yet to reach a conclusion. “The central principle is macro-prudential oversight and we are in discussions about what that means for the FSA,” he said.

Officials were unable to provide any further information on the pledge to create a single agency to tackle serious economic crime, which currently falls to the FSA, the Serious Fraud Office, Office of Fair Trading and other government bodies.The FSA was also seeking information about what this meant for its enforcement team, which has recently begun a string of high-profile investigations into insider dealing. “We will engage with government to ensure effective implementation of this policy while seeking to ensure the current strong moment in enforcement work – which underpins our credible deterrence agenda – is maintained,” the FSA said.