Plans to reform the tripartite system have opened a new can of worms

WHEN George Osborne set about dismantling the tripartite regulatory system, he said the reforms would help prevent another banking crisis.

But his decision to hand responsibility for the UK listing authority (UKLA) to the Financial Reporting Council (FRC) could end up causing even bigger problems.

The FRC is controlled by Vince Cable’s business department, whereas the two regulators that will police the City – the Prudential Regulatory Authority (PRA) and the Consumer Protection and Markets Agency (CPMA) – will be under the auspices of the Bank of England and, ultimately, the Treasury.

Critics of the government’s plans, such as London Stock Exchange boss Xavier Rolet, say the changes could lead to failings in the regulatory system.

If the reforms go ahead, the FRC will have responsibility for primary listings, while the CPMA will have responsibility for secondary listings and all other day-to-day oversight. Important information could get lost in the gap, say critics.

Rolet is also worried because the CPMA is the only body that has a seat on the new Brussels super-regulator, the European Securities and Markets Authority. But it will have no experience or knowledge of primary listings in the UK, meaning it will struggle to fight the UK’s corner when it comes to this issue.