FSA chair blames government for light-touch regulation

Chairman of the FSA claims the supervisor was under political pressure to adopt a light touch to regulation

LONDON - Lord Adair Turner, chairman of the UK Financial Services Authority, has hit out at the government for applying too much political pressure on the regulator to adopt light-touch regulation and not to be too heavy handed or intrusive at banks such as HBOS and Northern Rock.

Speaking at a hearing of the Treasury Select Committee, Turner claimed the political pressure was there but that, in retrospect, taking a light touch approach to regulation was a mistake.

At the same hearing, Mervyn King, governor of the Bank of England, claimed the central bank was powerless to avert the crisis, saying "We simply had no powers to take any actions." He admitted that he regretted not pushing the Financial Services Authority for more powers as he tried to avoid a turf war between the two bodies.

Lord Turner's remarks are deeply embarrassing for the UK prime minister, Gordon Brown, who oversaw the FSA during his role as Chancellor of the Exchequer.

John McFall, the chairman of the committee, said the remarks had raised serious questions about the independence of the UK regulator.

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