The U.K.’s newly elected coalition government has said it will create a new enforcement agency to tackle serious white-collar crime, stripping other regulators of their powers in this area and abolishing the troubled Serious Fraud Office.

The move was unveiled in a document released this week that sets out the government’s plans for the next five years.

The new agency will take on the work of tackling serious economic crime that is currently led by the Serious Fraud Office, the Financial Services Authority, and the Office of Fair Trading.

The idea is likely to prove controversial.

The SFO has struggled to implement a new enforcement strategy based on plea-bargaining and self-reporting. And the OFT recently bungled its first attempt to use new powers to crack cartels.

But the FSA has got its act together of late, successfully introducing a much tougher—and more effective—compliance regime under new Director of Enforcement Margaret Cole.

It’s unclear what the U.K.’s new enforcement landscape would look like with the new agency in place. The OFT would presumably still exist in some form, because it deals with a wide range of offenses, not just serious economic crime. The SFO would disappear.

The FSA—by far the largest of the three agencies—has market supervision responsibilities beyond fighting crime. Before the May general election that put the coalition in power, the Conservative Party, now the senior coalition partner, had pledged to abolish the regulator. It seems to have rowed back from that.

The government wants to transfer many of the FSA’s responsibilities back to the Bank of England, the central bank, but it will still look after for day-to-day “micro supervision” of banks, insurers, and financial markets.

That will be a relief to regulatory lawyers who warned that the abolition of the FSA would increase compliance costs.

Topics