Government to name new financial watchdog members

(SHARECAST) - The government is today due to name four external members of a committee that will work alongside the Bank of England's Monetary Policy Committee (MPC) and supervise Britain's financial sector.

The new committee's task will be to identify risks to the financial system, looking out for problems such as unusual levels of financial sector leverage, credit growth and debt. It is part of a new framework for financial supervision devised by the coalition government.

The new committee, to be known as the Financial Policy Committee (FPC), will, along with two other committees – the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) – replace the Financial Services Authority (FSA). Bank of England governor Mervyn King, his deputies Charles Bean and Paul Tucker, two other senior Bank staff and the current FSA chairman Adair Turner and chief executive Hector Sants, will also sit on the committee.

The FCA will have the power to ban or limit the distribution of financial products, while the PRA, which will be led by the Hector Sants, will have the power to release details of its intention to act against financial institutions, even before they have made an appeal.

The three new bodies will gain their powers once the FSA is scrapped next year, said financial secretary to the treasury Mark Hoban.

"The lesson of the financial crisis is that you need to have proper focus and clear mandates and the mandates need to be underpinned by the powers to do the job," he said.