CHANCELLOR Alistair Darling yesterday unveiled a white paper on financial regulation that will reform the way banks operate while retaining all the major aspects of the global financial system.<br /><br />Darling&rsquo;s proposals, while costly and onerous to the City, will mean that giant global financial institutions are here to stay, most activities will continue to be permitted and multi-million pound bonuses will soon make a return, even if they will be more closely monitored. There were few surprises, with the vast majority of proposals widely trailed and already under discussion.<br /><br />Darling told parliament that the Financial Services Authority (FSA) would be given greater powers to intervene in the operation of financial institutions, with more stringent capital and liquidity requirements, caps on leverage and a move towards macroprudential reforms and counter-cyclical reserve requirements.<br /><br />The City watchdog will be tasked with providing a yearly report on whether firms are complying with its code of conduct on remuneration.<br /><br />But the chancellor stopped short of reforming the structure of the tripartite regulatory system, prompting ridicule from his Conservative counterpart George Osborne. Osborne described the proposals as &ldquo;more of a white flag than a white paper&rdquo;, adding that Darling &ldquo;should have come here to bury the tripartite authority, not to praise it&rdquo;.<br /><br />The government will legislate in the autumn. Key changes include a new Council for Financial Stability, staffed by representatives of the tripartite authorities and chaired by the chancellor, charged with monitoring systemic risks. Banks will also be required to pay into a new national scheme providing impartial advice on financial products, while the Financial Services Compensation Scheme is to be pre-funded.