Former chancellor Alistair Darling has called on the financial services industry to support regulatory changes.
Speaking at the Building Societies Association conference in Manchester last week, Darling said he is unconvinced about moving regulation to the Bank of England but everyone must try to make it work.
He says: “I have some doubts about creating a super-regulator that has responsibility for monetary policy, deals with prudential policy and will try to anticipate the storms that might be gathering.
“The government has put it all under one roof but needs to remember it is still down to individual regulators. But it’s happened now and maybe it’s a political fix but in the course of being legislated we should all do our best to try to make it work.”
Darling warns that the Financial Policy Committee, which has responsibility for maintaining financial stability and is also a division of the Bank, will have the power to affect mortgage availability.
He says: “The FPC does in theory have the ability to affect the availability of mortgages by influencing interest rates based on financial risk rather than monetary policy. This is unchartered territory that no-one else is attempting so we will have to keep a close eye on it.
“The next Bank governor will indeed need super-human powers because he or she is being asked to do an awful lot.”
In a wide-ranging speech the Labour MP dismissed the prospect of the Independent Commission on Banking reforms ending the problem of banks being too big to fail.
He claims the proposed changes from Sir John Vickers’ ICB report are a good move but will not stop government bailouts of failed institutions.
He adds: “There is no chance any government will let banks fail no matter how small even with the Vickers reforms.”