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Political pressure could ‘dilute’ FCA powers

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Lord Sassoon, the architect of the twin peaks regulatory reforms, has warned the outcome of the Financial Services Bill could still be watered down by political pressure.
Political pressure could ‘dilute’ FCA powers

The Bill will bring an end to the Financial Services Authority (FSA) and give greater powers to the Bank of England.

In an interview with the Telegraph, Sassoon said: “There’s pressure to dilute things from people who want the new world to look like bits of the old world. In particular not to give the bank and the Prudential Regulatory Authority (PRA) the space to exercise the judgement which is critical to getting this right.”

He added: “I’m continuing resisting the pressure, even during this report stage, from people who would like the Financial Conduct Authority and PRA to look alike. We say they are very distinctive things, that’s the whole point. We’re creating two very distinctive authorities.”

Sassoon said preserving the distinctions could make the difference as to whether the regulators spot the next financial crisis or not.

“We need a Bank of England that can be freed up of the conduct issues to be able to make judgements and really understand how management and risks work within the ­systemic financial institutions,” he said.

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