June 2010 Insurance Industry Regulator to be Disbanded.

The Chancellor George Osborne has sounded the death knell for the Financial Services Authority (FSA).

Before the election the then shadow Chancellor announced his intentions to give the Bank of England responsibility for maintaining financial stability. Speaking in the House of Commons on 16th June, the Chancellor said the current system of financial regulation had "failed spectacularly." Osborne confirmed his plans to dismantle the existing regulatory systems, led by the FSA. He also told the Commons that the government is "committed to handing over micro-supervision to the Bank of England"

The details of his plans were outlined by the Chancellor later that day during his first speech to The Lord Mayor's dinner to the Bankers and Merchants of the City of London. Supervision of the financial sector is to be transferred to a new body under the Bank of England. The FSA's role in fighting serious financial crime will be undertaken by an Economic Crime Agency. The regulation of authorised financial firms, including insurance sector, will be undertaken by a new Consumer Protection and Markets Authority (CPMA).

In describing the CPMA's role, George Osborne said: "It will also be responsible for ensuring good conduct of business in the UK's retail and wholesale financial services, in order to preserve our reputation for transparency and efficiency as well as our position as one of the world's leading global financial centres."

Commenting on the plans to disband the FSA, British Insurance Brokers' Association Chief Executive Eric Galbraith said:  "We are pleased that our concerns over splitting the regulation for our sector have been taken on board and that insurance intermediaries appear to be falling under the scope of one new regulator, the Consumer Protection & Markets Authority."

The Chancellor has promised to implement these changes to the UK's regulatory architecture by the end of 2012 following a consultation period.