Cyclical deja vu: emancipation of the FSA and the rise of the Bank of England once more

Dr Clare Chambers, Senior Law Lecturer, Commercial Law Research Unit, Bristol Law School, UWE, clare.chambers@uwe.ac.uk

Introduction

Financial regulation and economic development have one thing in common – they both develop in a cyclical manner and intertwine. This is especially the case following the announcement by the coalition government to emancipate the Financial Services Authority (FSA). During its time span, the United Kingdom (UK) has seen a ‘golden age’ of finance which has resulted in a housing boom and an unprecedented period of economic prosperity. However, during the last three years of the Labour government, the UK saw an unprecedented economic downturn. When the system of financial regulation has been reformed it is certain that these changes have been spurred on by a financial crisis (or two!) and a financial decline. Therefore, why are we surprised that on the third anniversary of the ‘Credit Crunch’ a new regulatory structure has been proposed by the government? Is it because the FSA was heralded as the ‘super regulatory agency’ that would put an end to financial scandals and financial crises? Well … yes, we became too complacent that the golden age of finance would continue and that the FSA would save us from the perils of the past.