The FSA announced a sweeping overhaul of the UK’s financial regulatory regime yesterday, marking a definitive break with its previous “light touch” approach and attempting to set a new global standard for the post-crisis world.
Lord Turner, chairman of the Financial Services Authority, set out plans to curb banks’ ability to take excessive risks by forcing them to hold more capital and increase their holdings of liquid assets and cash. He pledged to scrutinise any institution that could threaten the stability of the financial system.
Gordon Brown, prime minister, will today urge other EU member states to follow the principles in the Turner report when he travels to Brussels for a summit.
Lord Turner supported calls for the creation of a pan-European regulatory body – a move the FSA and the City of London have previously opposed – as the only way to save the European market for financial services. “We’ve got to think about how to run a single market in retail banking without a European federal government,” he said.