The Bank of England should be given new powers to ensure stability of the financial system, according to a report that blames confusion in Gordon Brown’s 'tripartite' regulatory system for worsening the banking crisis.

The House of Lords report says neither the Bank nor the Financial Services Authority paid sufficient attention to the risks building up, and that clear lines of responsibility are needed.

The Lords economic affairs committee supports the Conservative view that the Bank should be put in the box seat of ensuring overall stability in the system – so-called macroprudential supervision.

The verdict of the committee, chaired by Lord Vallance, former BT chairman, comes as the Treasury prepares to publish detailed proposals for legislation in a white paper this month on improving supervision of the financial system.

Financial Times, Daily Telegraph