By Simon Miller
The Government and the Bank of England has appointed three external members to the interim Financial Policy Committee (FPC).
Former vice chairman of the Federal Reserve Donald Cohn and Michael Cohrs, the former member of the Presidential Task Force on Market Mechanisms, have been appointed alongside former director general of the CBI Sir Richard Lambert and Treasury advisor on stability Alistair Clark.
The interim FPC has been set up to prepare the ground for the creation of the FPC which will be responsible for the stability of UK’s financial system.
The government expects the process to take up to two years and hopes that members of the interim FPC will apply for the main body.
Meanwhile, the Government has set out further details on its intended financial regulation reforms.
A new approach to financial regulation: building a stronger system expands on the Government’s proposals, set out last year, to disband the Financial Services Authority and establish a new system of more specialised and focused financial services regulators. The Government’s reforms focus on three key institutional changes:
• the creation of the FPC in the Bank of England;
• the establishment of a new Prudential Regulation Authority as a subsidiary of the Bank; and
• the creation of an independent conduct of business regulator, the Financial Conduct Authority, which was formerly provisionally titled the consumer protection and markets authority.
Following the consultation, the Government will present a further White Paper including a draft Bill for pre-legislative scrutiny in the spring.
Despite welcoming the degree of continuity between the old and new regulators, Michael McKee, partner at DLA Piper, warned: “The reorganisation process will be expensive for the regulators but will also result in significantly higher ongoing costs for them. These rising costs will be due to the increase in the number of agencies with which they will be expected to interact.”
Financial secretary to the Treasury Mark Hoban commented: “The Government is delivering on its commitment to reform the financial system, to avoid repeating the mistakes of the recent financial crisis and to ensure that taxpayers are protected.”