THE TORIES will begin the “most radical overhaul” of the banking system in a generation if they are elected next week, George Osborne said yesterday.
Speaking to an audience at the Institute of Directors yesterday, the shadow chancellor said he would start dismantling the Financial Services Authority (FSA) “within months” of taking office, replacing it with a beefed-up Bank of England.
He will also create a new Financial Policy Committee within the Bank. Like the Monetary Policy Committee (MPC), it will include independent members charged with monitoring banks’ liquidity and capital levels.
A new Consumer Protection Agency will take on some of the roles of the FSA and the Office of Fair Trading, with a remit that will see it protect consumers of financial products. And an Economic Crime Agency will be given the task of cracking down on white-collar crime.
The Tories will also start designing a new banking levy within weeks of taking office, and hope to implement the tax on banks’ wholesale funding within a year of winning the election. Osborne hopes the levy, which will raise in excess of £1bn, will encourage banks to bring down remuneration levels.
“I want us to be the home of successful and competitive wholesale finance. But we need a banking system that supports the British economy, not enslaves it,” he said.
Osborne was sharing a platform with Vince Cable, the Treasury spokesman for the Liberal Democrats, who reiterated the party’s commitment to “split the big banks so that traditional business and personal lending is not dominated...by so-called ‘casino’ activities”.