Tory answer to banking reform revealed

By Alex Stevenson

George Osborne is laying out his plans for banking regulation reform in a Conservative policy white paper today.

The shadow chancellor’s proposals include ending the tripartite system of regulation between the Financial Services Authority (FSA), which he would scrap, the Treasury and the Bank of England.

Mr Osborne will make much of the “misery and hardship” suffered by the British people as a result of what he describes as Gordon Brown’s poor decisions as chancellor.

The proposals came as Vince Cable, Lib Dem Treasury spokesman, called for nationalised banks to be split.

“British financial services must be internationally competitive without putting economic stability at risk,” he said.

“Strong regulation by able regulators benefits the financial services industry as well as the wider economy.”

He prefers returning regulatory powers to the Bank, undermining the FSA’s role.

Treasury minister Lord Myners dismissed Mr Osborne’s proposals as “window-dressing”.

The government set out its own proposals last month. It plans to give the FSA a statutory duty to preserve stability in the sector and reinforce the tripartite system through the creation of a Council for Financial Stability.

Liberal Democrat Treasury spokesman Vince Cable will also deliver his own suggestions today. He will urge the government to break up its big state-owned banks, describing them as a lingering threat to the economy.