FSA could survive Tory government

Reports today suggest that George Osborne, the new Tory chancellor has had to scrap plans to hand over banking supervision to the Bank of England under a five-year coalition deal struck with the Liberal Democrats last night.

According to the Financial Times newspaper, Tory officials have admitted that the Financial Services Authority could survive the planned shake-up of banking regulation.

While the Bank is thought to be given macro-prudential control, monitoring systemic risk in the economy, the Liberal Democrats do not want it to be responsible for regulating individual banks.