Can't tell the players without a programme

Typical! You wait three years for a new UK financial regulatory body to be set up, and then three come along at once!

The Treasury has released a paper detailing proposals for future financial regulation, involving a greater role for the Bank of England and the breakup of the much-derided Financial Services Authority (or Fundamentally Supine Authority as Private Eye calls it).

Within the Bank of England there's to be a new Financial Policy Committee (FPC), which will operate alongside the existing Monetary Policy Committee (MPC). The role of the FPC will be to identify systemic risks within the financial system before those risks put the stability of the whole structure at risk. For example, the FPC would presumably have been expected to blow the whistle on the inordinate expansion of home lending, and the banks' perilous reliance on wholesale sources of funding, well before the crisis hit in 2007/08. It would be hard to deny that between them, the Bank of England and FSA completely fumbled the ball on this one.

While the FPC monitors the big picture, the FSA's responsibility for overseeing the activity of individual firms will be split between two new bodies, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority(PRA). Confused yet? You should be. Here's a paragraph on how it's all supposed to fit together, from Robert Peston's blog on the BBC website:

...the FPC will have powers over the PRA and FCA to make recommendations, which the PRA and FCA will either have to implement or explain publicly why not; and most importantly of all, the FPC will have powers from secondary legislation to significantly influence the behaviour of banks and other financial institutions, by directing the PRA and FCA to do certain things on its behalf.

Yeah, you just know that'll work.

The previous system, put in place (lest we forget) by Gordon Brown, failed abjectly when things got messy. (Unlike Private Eye, I see plenty of blame for the Bank of England here, rather than just for the FSA, but that's another story). However, it's hard to be confident that this complex new structure is the right solution. The three new bodies need to attract senior staff who know the kinds of things that banks and hedge funds get up to, but are not in any way beholden to the financial industry; and it needs to attract them at wages that are likely to be a fraction of what the industry itself would pay for that kind of talent. Which might not be as simple as it sounds.