10 Jan, 2008
Henley - 10-Jan-2008
Chancellor Alistair Darling today said the FSA must learn the
mistakes of the Northern Rock affair, but said it must also be
given additional powers to deal with future banking crises.
Speaking at the Treasury Select Committee, Darling rejected any
suggestion the FSA should be dismantled and said it should be given
the tools necessary to do its job.
But he acknowledged that "in retrospect the regulator should have
taken more action when it saw the extent to which Northern Rock was
exposed" by its business model.
He said: "The FSA has got to learn the mistakes that it made just
as the rest of us have to do. But I do think it makes sense to give
the FSA additional powers."
The Chancellor said the regulator may need powers along the lines
of those in place in Canada and America to intervene at an earlier
stage to help banking institutions that get in to trouble. He said
this could even involve helping with the restructuring of an
He said the essential architecture of the existing regulatory
system is sound. However he envisages introducing "wide ranging"
changes to existing legislation, such as the Financial Services and
Markets Act and Banking Acts.
He said: "You do need to make progress to strengthen the tools at
our disposal so that in the event of this sort of thing happening
again we can take action and we can take it in a way that is
Darling said nationalisation of Northern Rock remains an option on
the table, as the government might not be able to find a private
He offered little comfort to shareholders too, suggesting people
who invested in the bank after the crisis became apparent would
have been aware of the risk they were