George Osbourne, the Chancellor of the Exchequer for the UK, has followed through on a promise that the now Prime Minister, David Cameron, made in July 2009 in that the Financial Services Authority (FSA) will be abolished.
Over the next 2 years, the powers of the FSA will be split among different regulators but with most power going to the Bank of England. The current chief executive of the FSA, Hector Sants, will become the Chief Executive of one of the new agencies called the Prudential Regulatory Authority. There will also be the Financial Policy Committee which will also be headed by Sants but the governor of the Bank of England, Mervyn King, will have the overall control over both these bodies making the ultimate decisions at both. Workers at the FSA will be split among the new agencies over time and by 2012, the FSA will no longer exist.
The decision to make these changes comes along due to the conservatives thought that the FSA have failed in what they had set out to do. The former Prime Minister, Gordon Brown, set up the FSA in 1997 as they believed that Bank of England were not handling the supervision of the financial services in the best possible way. It looks as though that 15 years on, the power will switch back to where it originally was.