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Lords committee to call for Bank to play a stronger role

THE tripartite system of financial supervision is fundamentally flawed and should be revised, a report by the House of Lords Economic Affairs Committee will say this week.<br /><br />The committee, which has been probing the role played by the Bank of England, the Treasury and the Financial Services Authority (FSA) in the banking crisis, is expected to say that the FSA should hand some of its powers back to the Bank.<br /><br />The report will advise that the Bank take responsibility for monitoring risks in the financial system and will advocate new regulation to cover systemic threats to financial stability.<br /><br />Such a measure would give the central bank the power to impose temporary measures at times of economic volatility, such as requiring financial institutions to hold more capital.<br /><br />The committee &ndash; which is chaired by Lord Vallance and includes Lord Eatwell, professor of financial policy at Cambridge University &ndash; will suggest that the Bank introduces new regulation to limit levels of gearing at financial institution.<br /><br />The committee&rsquo;s report will also call for an overhaul of the system of non-executive directorships and curbs on remuneration.