MPs: Darling's big reform bid has no depth


INFLUENTIAL group of MPs investigating the banking crisis will today dismiss chancellor Alistair Darling&rsquo;s White Paper bid to reform financial regulation as &ldquo;largely cosmetic&rdquo;, in a devastating final report.<br /><br />The Treasury Committee will say Darling&rsquo;s efforts to lead the City into a new rules era are based on &ldquo;merely re-branding&rdquo; the regulatory system, and would not prevent future crises.<br /><br />But despite saying that the Financial Services Authority (FSA) &ldquo;failed spectacularly&rdquo;, the committee stopped short of calling for it to be axed, pouring cold water on plans by Tory shadow chancellor George Osborne to scrap the regulator.<br /><br />&ldquo;In the Committee&rsquo;s view, no macroprudential responsibilities should be allocated until a decision has been made about the precise tools needed,&rdquo; the report will say.<br /><br />Darling&rsquo;s plans for stricter capital requirements for banks, to ensure they have enough cash to stave off collapse in downturns, may not go far enough, it will add.<br /><br />Committee chairman John McFall MP said: &ldquo;Tweaking the capital requirements... may work, but we should not rule out more drastic action, such as forcibly shrinking the banks or separating out the riskier functions.&rdquo; And the report will say US-style &ldquo;Glass-Steagall&rdquo; rules, separating banks&rsquo; retail and investment services, should not be ruled out.<br /><br />The committee will add to mounting calls for bankers to be forced to attain a range of specific qualifications if they want to carry out regulated activities.<br /><br />It will also speak up for the FSA, welcoming &ldquo;the speed of progress made&hellip;in recruiting staff, and boosting training, in order to improve its scrutiny of UK banks&rdquo;.<br /><br />Angela Knight, head of the British Bankers&rsquo; Association, will today warn that firms should take both experience and banking qualifications into account when picking senior staff.