MPs: Darling’s big reform bid has no depth
THE INFLUENTIAL group of MPs investigating the banking crisis will today dismiss chancellor Alistair Darling’s White Paper bid to reform financial regulation as “largely cosmetic”, in a devastating final report.
The Treasury Committee will say Darling’s efforts to lead the City into a new rules era are based on “merely re-branding” the regulatory system, and would not prevent future crises.
But despite saying that the Financial Services Authority (FSA) “failed spectacularly”, 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.
“In the Committee’s view, no macroprudential responsibilities should be allocated until a decision has been made about the precise tools needed,” the report will say.
Darling’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.
Committee chairman John McFall MP said: “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.” And the report will say US-style “Glass-Steagall” rules, separating banks’ retail and investment services, should not be ruled out.
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.
It will also speak up for the FSA, welcoming “the speed of progress made…in recruiting staff, and boosting training, in order to improve its scrutiny of UK banks”.
Angela Knight, head of the British Bankers’ Association, will today warn that firms should take both experience and banking qualifications into account when picking senior staff.