Turner: Osborne’s regulator reshuffle will cause “disruption”

Adair Turner has today joined his colleague, Hector Sants, in questioning the wisdom of George Osborne’s policy to scrap the Financial Services Authority.

Turner is Chair, and Sants is Chief Executive, of the FSA. Speaking to Sky News about the policy, Turner said:

“The Conservatives have said that they will combine the banking supervisory, the insurance supervisory, and regulatory functions of the FSA with the Bank of England.

“I entirely accept and indeed I said today that there’s a vital missing bit of our regulatory approach – missing in the past – which resides half-way between the Bank of England, a central bank focused on inflation and a regulator focused on individual firms.

“And therefore we do have to get that right but I’ve always believed that we can get that right without shuffling around the boxes because when you shuffle around the organization boxes and change reporting lines you inevitably have disruption.”

Earlier this month, Sants said: “I strongly believe that dividing responsibility for enforcement activity would invite a fragmentation of approaches and a ‘turf war’ between the different bodies involved.”

David Cameron reiterated the Conservative’s policy today at his speech to the CBI. He said:

“And, unlike Labour, we will abolish the tripartite system and give overall responsibility for regulating our banks back to the Bank of the England.”

And as Left Foot Forward has previously reported, the United States’ Senate are considering moving powers in the opposite direction – that is, from central bank to independent regulator.