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Friday, UK government's Treasury Committee assessed that the reforms to the institutional structure of the Tripartite Committee announced in the Treasury's recent White Paper was largely cosmetic. Merely re-branding the Tripartite Standing Committee would do little in itself, the committee said in its latest report titled Banking Crisis: Regulation and Supervision.
The Treasury Committee said there remains a lack of clarity regarding who is responsible for systemic oversight, and who has executive authority in a crisis.
"Where before no-one had a formal responsibility for financial stability, now many do-the Bank of England, the FSA, the Treasury, the Council for Financial Stability and the Bank's Financial Stability Committee. Where responsibility lies for strategic decisions and executive action was, and remains, a muddle," the report said.
John McFall, Chairman of the Committee said the FSA failed spectacularly in its supervision of the banking sector. But, it has acknowledged this and already started to rectify its mistakes.
Further, the Committee said no new macro prudential responsibilities should be allocated until a decision has been made about the required tools. The report does not advocate substantial change to the tripartite system.
According to McFall, change and coordination are needed to clarify responsibility, but the picture is constantly moving. He said, "When the dust settles though, we cannot afford to have any ambiguity over who is in charge, and who is responsible if something goes wrong."
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