FSA to keep its financial crime powers

GEORGE Osborne has performed a U-turn over a landmark policy, which would have seen the FSA stripped of its power to prosecute financial crime and its oversight of companies listing on the stock exchange.

The chancellor had previously said he would give the FSA’s prosecution powers to a new Economic Crime Agency (ECA), which is being set up to take on the responsibilities of the Serious Fraud Office and the Office of Fair Trading.

But in a major coup for Hector Sants, the chief executive of the FSA, the City watchdog will hang on to the powers for the next two years.

They will then be handed to a new Consumer Protection and Markets Agency (CPMA), which will replace the FSA when it is disbanded as part of Osborne’s overhaul of financial regulation.

“After much consideration, we have decided that for the moment the FSA’s powers of prosecution will lie with the new CPMA rather than the new Economic Crime Agency,” said a Treasury spokesperson.

Treasury aides insisted the chancellor had not performed a U-turn, but the policy was a key plank of Osborne’s pre-election pledge to scrap tripartite regulation.

Margaret Cole, who was director of enforcement at the FSA when Osborne criticised its record, is likely to continue in that role, and to take up a similar one when the CPMA is created.

The UK Listing Authority, which oversees both the new listing of companies and the ongoing trading of existing securities, will also fall under the CPMA.

This is a major coup for the City, with LSE boss Xavier Rolet pushing for regulatory powers to lie with one body rather than be split with the Bank of England and the Financial Reporting Council (FRC).