Chancellor calls for changes in banking regulation

by Gill Montia

Story link: Chancellor calls for changes in banking regulation

The Chancellor of the Exchequer, Alistair Darling, has called for changes in the way the UK’s banking system is regulated, in the light of the Northern Rock crisis.

Mr Darling put forward his views to MPs on the Treasury select committee during a questions session in which he stated that banks should be stopped from hiding debts “off-balance sheet”.

Whilst defending the role of the authorities in the crisis, he also pointed out that Northern Rock executives were right when they described the causes of the bank’s difficulties as unprecedented.

According the Chancellor, the government is already consulting the banking sector and others on a better system of rescuing banks in danger of collapse.

His is, however, opposed to the suggestion that the Financial Services Authority (FSA) and the Bank of England should merge.

This view was maintained by Mr Darling, despite tough questioning from MPs about the roles of the Bank of England, the FSA and the Treasury, once Northern Rock’s troubles became evident.

It has been suggested that the tripartite system currently responsible for supervising banks led to dithering amongst the parties, which were failing to keep one another fully informed.

When asked if that system had failed, Mr Darling declined to give a decisive answer.