Chancellor of the Exchequer George Osborne published draft legislation that will hand powers to the Bank of England to police Britain's banks in the biggest regulatory overhaul since 1997. The Financial Regulation Bill, which will now undergo pre-legislative scrutiny, will abolish the Financial Services Authority and transfer most of its responsibilities to the central bank. "This is a key milestone in the process of developing and implementing a new system of financial regulation, which will address the flaws in the ‘tripartite' model that contributed to the financial crisis," Treasury Minister Mark Hoban said in an e-mailed statement in London yesterday. "This is a detailed blueprint for regulatory reform setting out how the new structure will work." The bill is scheduled to be put to Parliament formally later this year and approved by legislators in late 2012. It will pave the way for the central bank's Financial Policy Committee to begin its work of monitoring risk. The committee chaired by Governor Mervyn King met informally for the first time yesterday and will get full legal powers just as King's second five-year term as governor expires. Yesterday's paper setting out the details includes new proposals drawn from a consultation process that began in February, the Treasury said. These policies include detailing responsibilities for the insurance sector, an "updated and enhanced" competition regime under the Financial Conduct Authority a new body that will seek to protect consumers and police the integrity of markets and measures to tackle misselling of financial products. King and Osborne began work last June, a month after Prime Minister David Cameron's coalition government took office, on the regulatory overhaul, which will give the Bank of England more power than it has ever had in its 317-year history. When the previous Labour government took office in 1997, Gordon Brown, the chancellor at the time, handed the bank powers to set interest rates, while stripping it of supervisory and some financial-stability responsibilities that it is now set to regain. Osborne said in a foreword to the legislation that the new system of regulation will draw on lessons learned in the 2007 financial crisis, which UK regulators failed to predict and did not "adequately" respond to. "The objective now is to learn from what went wrong and put these mistakes right, in order that Britain can be the home of stable and competitive financial services," Osborne said. "The government is committed to introducing a new approach to financial regulation one which is based on clarity of focus and responsibility and which places the judgment of expert supervisors at the heart of regulation." The Financial Conduct Authority will have new powers to publish summaries of disciplinary investigations earlier and to ban risky financial products or intervene in how they are marketed. The legislation will also establish the Prudential Regulation Authority, which will be responsible for overseeing all deposit-taking institutions, insurers and investment banks and effectively replaces the FSA. The British Bankers' Association said in an e-mailed statement that it's "essential to everyone in the UK that this process results in the creation of the right regulatory institutions with the right powers and crucially with the right communications in place to ensure that future problems are identified, anticipated and acted upon quickly." From / Gulf News