Must try much harder

18 September 2007 By Edward Hadas Follow @edwardhadas

The lender s highrisk strategy was no secret. But the FSA, its regulator, merely watched. The Bank of England intervened too late. The Treasury let a little crisis grow into a national panic. The UK s experiment with a complex tripartite system seems to have failed.

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According to the 2006 Memorandum of Understanding, UK financial stability is the responsibility of a Tripartite Standing Committee of the Bank of England, the Financial Services Authority and the Treasury.

The central bank's responsibility was defined as ensuring the stability of the monetary system, overseeing the payments system, maintaining a broad overview of the system as a whole and undertaking financial operations in exceptional circumstances.

The FSA was charged with the supervision of institutions, the supervision of markets, response to problem cases when those responses are not the responsibility of the Bank of England and regulatory policy.

The Treasury was considered responsible for the overall institutional structure of regulation and legislation but no operational responsibility.

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