Has George Osborne pulled the rug from the FSA?
Rumours in the market suggest that George Osborne is on the verge of announcing major changes to the FSA (Financial Services Authority) which could see the Authority become a subsidiary of the Bank of England. Despite indications to the contrary only days ago it now seems that the Conservative party is trying to push through its initial plans to strip the FSA of its main status in the UK regulatory arena and replace it with the Bank of England.
However, we have already seen movement in the higher echelons of the FSA with chief executive Hector Sants having already announced he is leaving and others, who were earmarked to take his place, also considering their positions. The problem now is that the UK government has created something of a vacuum for the FSA and until we see exactly what plans George Osborne has for the Authority nobody will commit themselves to taking on the chief executive role. Indeed, if the FSA is effectively downgraded and becomes a subsidiary of the Bank of England then the UK government may find it difficult to appoint a leader with any real clout in the city.
We await further developments in due course although time is certainly now of the essence.
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