Government and Tripartite system blasted

Following on from the Northern Rock fiasco and the continued uncertainties following the ‘credit crunch’ a number of industry commentators have called for a re-think regarding the structure of the relationship between the Bank of England, HM Treasury and the Financial Services Authority (FSA).

Speaking in the House of Lords, Lord Renton of Mount Harry, said: “Surely it would be right at the moment for the Bank of England to have clear over-riding responsibility for the health of the system while the FSA acts as a junior partner looking after the liabilities and the balance sheet of financial companies.”

Defending the current system, Lord Davies of Oldham, suggested that the system had worked, but had been put under increasing pressure in recent months. He said: “The Tripartite system has been tried and tested on a number of occasions. There are lessons to be learnt from the developments with regard to Northern Rock.”

However, this statement was rebuked by Baroness Noakes, who suggested that ‘at its first trial, it failed dismally’.

Lord Davies confirmed that a study of the Tripartite system and each of the organisations involved was currently being undertaken, with the results due at the end of the year.

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