Perhaps the most obvious failing of the UK system that the paper identifies is the fact that no single institution has the responsibility, authority or powers to monitor the system as a whole, identify potentially destabilising trends, and respond to them with concerted action.
The proposed restructuring involves a new Financial Policy Committee at the Bank of England with a Prudential Regulatory Authority covering micro prudential supervision reporting to it. A new body called the Consumer Protection & Markets Authority (CPMA) will take on much of the remaining work of the FSA.
In its response the ACT welcomed the enhanced emphasis on financial stability but expressed doubt as to whether the new structure would provide sufficient clarity of roles and responsibilities without significant further work on defining objectives and governance. In particular the ACT was dismayed to see that the UK Listing Authority might be moved to the Financial Reporting Council rather than it staying in the CPMA.
There were further concerns that the division of responsibilities might leave the CPMA with a weakened negotiating position at European financial regulatory discussions within the European Securities and Markets Authority.
