FSA secures new powers
CITY watchdog the Financial Services Authority (FSA)will have powers to claw back bank bonuses that breach globally agreed rules on remuneration and force hedge funds to provide data, a draft law published yesterday showed.
The draft law’s main provisions were announced during Wednesday’s Queen’s Speech and enforce pledges Britain and other members of the G20 group of leading countries made this year to apply new rules following the credit crunch.
“The bill we are introducing today is central to the government’s reform agenda that seeks to empower consumers and make sure that, in the future, taxpayers will not be called on to protect banks from the consequences of their actions,” said chancellor Alistair Darling.
The FSA will have “information gathering powers extended to non-regulated firms, including hedge funds, where information is relevant to financial stability”, the draft law says. Hedge fund managers are already required to register and provide data. The European Union is adopting a law with similar provisions.
The FSA will have a new, explicit objective of helping to ensure financial stability, giving it a bigger role in monitoring and assessing risk that could destabilise the broader financial system – a supervisory gap the credit crunch highlighted in many countries.
“The measures in the bill, particularly under the proposed financial stability objective, will give the FSA more powers to carry out its remit from parliament in a more effective manner,” an FSA spokesman said.
The Conservative Party has said it wants to abolish the FSA, saying its tripartite supervision of banks with the Bank of England and Treasury has failed.