It turns out that the FSA may survive even after the Tory pledge to abolish it as part of their restructuring of oversight of the UK financial services industry and talk in the Queen’s speech of handing "control of macroprudential supervision" and "oversight of microprudential supervision" to the Bank of England (BoE).

The Financial Services Authority (FSA) was created shortly after Labour came to power in 1997. It formed part of the ‘tripartite’ system together with the Treasury and the Bank of England overseeing the UK’s financial services.

Many believe that this system was part if not all of the reason for the failures that led to Britain’s current economic problems.

Some believe that the FSA was too concerned with customer facing mis-selling of financial products and completely missed the bigger picture of systemic risk failure within the banks and how those products were formed and structured.

But the coalition Con/Lib government now finds that the Con part wants the BoE to take it all on with an as yet undefined consumer protection agency, whereas the Lib part (Vince Cable) wants the FSA to survive.

This indecisiveness is what we do not need. The country is in economic turmoil, mainly because of lack of proper oversight, but the newly formed government cannot act quickly and decisively to put the required structure in place. This woolliness could easily be exploited by the more unscrupulous within the City.

There are also all those dealing with customers on a day to day basis. They have been ready to conform to the outcome of the FSA’s Retail Distribution Review (RDR). This promised to overhaul and completely change the relationship between customer and advisor. Provider commission was out and fee-paying customers were in. Higher degree level qualifications were also being factored in to ensure that advisors are highly qualified. All overseen by the FSA. Will this programme continue?

At the moment one assumes that the BoE is not geared up to take on full regulatory control. There will have to be a transition and recruitment period. And with the FSA winding down, where better for the BoE to recruit from than the redundancy payout holding ex-FSA personnel, together with all the attendant baggage of ideas.

The Tories and LibDems both had a clear vision of what they wanted to achieve within this sphere. Now they are acting together on this we may end up with a misshapen entity totally unfit for purpose.

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