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Tory FSA plans 'may have been shelved'

Tory FSA plans 'may have been shelved'

Plans unveiled in the Conservative Party manifesto may have been shelved as one of a series of concessions made by the organisation as it allied with the Liberal Democrats in order to achieve a parliamentary majority.

Initially, the Tories said they would break up the Financial Services Authority (FSA).

The political party had intended to hand the Bank of England and its governor Mervyn King powers to control the balance sheets of all the UK's major banks and finance houses.

It would also have been transferred regulation of the broader financial regime.

However, it is now thought the FSA will remain intact and a committee may be created comprising senior directors from the FSA, the Bank of England and independent experts.

It would have powers to intervene if it decides there is too much risk taking occurring.

Jeremy Summers, business crime and regulation partner at Russell Jones & Walker, said: "One of the potential consequences of the planned break-up was the possibility that FSA enforcement would be moved into a new national fraud agency incorporating the Serious Fraud Office (SFO) and perhaps other law enforcement agencies.

"There seems to have been something of a media turf war between the SFO and FSA recently positioning to take the lead in any such agency and a growing consensus that this agency is needed.

"If it is now to be shelved that might be a serious setback in the UK's future anti-fraud capability."