On 20 July the Conservatives published their White Paper on financial regulation. The paper sets out the Conservatives' plans for reforming the UK financial services regulatory framework. If elected to government at the next general election the Conservatives plan to:  

  • abolish FSA and the existing tripartite system;  
  • make BoE responsible for macro-prudential regulation, judging and controlling risks to the financial system as a whole. They will do this by creating a powerful new Financial Policy Committee within BoE, working alongside the Monetary Policy Committee, which will monitor systemic risks, use new macro-prudential regulatory tools and carry out the special resolution regime for failing banks;  
  • make BoE responsible for the micro-prudential regulation of all banks, building societies and other significant institutions, including insurance companies. They will do this by creating a new Financial Regulation Division of BoE to carry out this microprudential role, headed by a new Deputy Governor for Financial Regulation;  
  • reform the structure of BoE to reflect its new responsibilities and ensure the close coordination of monetary policy, financial stability and the regulation of individual institutions;  
  • provide BoE with new regulatory "tools" to ensure financial stability. These will include being able to impose greater capital and liquidity requirements to recognise risks concerning the size and complexity of institutions and using higher capital requirements to regulate high-risk activities and bonus structures;  
  • ensure there is a single Treasury minister with specific responsibility for European financial regulation;  
  • create a new Consumer Protection Agency (CPA) and transfer consumer credit regulation from OFT to the CPA. This will create a unified regulatory regime for financial services firms and consumers;  
  • force banks to be more transparent about their retail consumer charges; and  
  • ask OFT and the Competition Commission to conduct a focused examination of the effects of consolidation in the retail banking sector.