LONDON (Reuters) - The Financial Services Authority (FSA) will be scrapped on March 31 to reform a supervisory system that failed to spot the financial crisis coming, forcing Britain to bail out banks.
The new system gives regulators stronger powers to intervene early to stop the mis-selling of financial products seen over the past two decades.
The main elements are:
* Financial Policy Committee:
- Based at the Bank of England and chaired by the central bank's governor, its job is to spot system wide risks, such as property bubbles, before they destabilise the financial system.
- Sets overall tone for regulation and has powers to direct supervisors to raise capital levels at banks generally or in specific sectors like property to cool activity.
* Prudential Regulation Authority:
- New subsidiary of the Bank of England with its own chief executive, Andrew Bailey, and based in a separate building.
- Remit to make sure banks, insurers and building societies hold enough capital and abide by rules to curb bonuses.
* Financial Conduct Authority (FCA):
- A new body employing about 2,800 staff and headed by Martin Wheatley, based in the former FSA's building in London's Canary Wharf docklands.
- Ensuring all financial institutions and markets behave according to the rules and don't rip off consumers. It conducts enforcement cases with tougher powers and much higher fines.
- New power to ban products and warn the public early if it thinks a firm is not behaving. New power to appoint someone to report on a firm with the firm footing the bill.
- Remit to ensure there is enough competition in financial services, a new departure for a UK financial regulator. The FCA will be responsible for supervising consumer credit from 2014, widening its scope substantially.
(Reporting by Huw Jones; Editing by Elaine Hardcastle)