Rift on bank reform continues

The rift between Chancellor Alastair Darling and Bank of England governor Mervyn King grew wider yesterday as Mr King revealed that he has not been consulted on an important new White Paper on financial services reform due to be delivered by the government. Speaking to the Treasury Select Committee, the central bank governor also said that there had been no meeting between the Bank, Treasury and Financial Services Authority regarding the contents of the legislation. These three organisations form the tripartite group responsible for the bulk of monetary and fiscal oversight in the UK. King and Darling have clashed in recent days over disagreement on the extent to which the regulatory system should be reformed. In a speech to City luminaries at Mansion House last week, Mr King insisted that the system must be completely overhauled, with more power being granted to the Bank of England. But Mr Darling said the system would remain basically as it is, with no significant increases in the regulatory burden faced by banks. The White Paper is due to be presented by the government next week, and will form the basis of future wide-ranging banking legislation.