George Osborne has this morning taken delivery of Sir James Sassoon’s interim report into the tripartite structure of financial regulation in this country – which the shadow chancellor commissioned last autumn.
Sir James was formerly Alistair Darling’s envoy to the City and was appointed to David Cameron’s Economic Recovery Committee last month.
He says that it is clear that "fundamental reform" is needed and hopes that his report will kick-start a debate on what those reforms should be. He notes that such debates are already taking place in other countries by that "the UK the authorities have not yet engaged with many of the crucial questions."
- There should be new responsibilities and powers for the Bank of England so it can call time on debt;
- The Financial Services Authority should be fundamentally reformed to minimize the risk of individual institutions being able to again endanger the stability of the financial system;
- A full analysis should be conducted on the separation of ‘utility’ and ‘investment’ banks;
- There should be Increased capabilities for safeguarding financial stability in all the authorities, plus a closer relationship between the authorities to ensure better crisis handling.
George Osborne welcomed the "powerfully argued report" and promised to carefully consider it over the coming weeks and months. He added:
"The current tripartite structure failed to protect Britain’s economy from over indebtedness, a banking crisis, and ultimately recession. The regime needs a radical overhaul, and this report sets out the options that we need to consider.