By DAVID ENRICHLONDON—The governor of the Bank of England is calling on U.K. lawmakers to act more quickly to transfer financial-regulatory powers to the central bank, a handover currently planned for the end of 2012.
Responsibility for supervising the U.K.'s banking industry now rests with the Financial Services Authority, an independent agency. Prime Minister David Cameron's government last year proposed restructuring the country's regulatory system and dissolving the FSA. Under the plan, the Bank of England would get authority for overseeing the banking sector.
The government wants the changes to take effect by the end of next year. Some lawmakers think the schedule is rushed, and a parliamentary committee warned in a report last month that the government "may be proceeding with undue haste," noting the daunting complexity of the overhaul.
On Tuesday, Mervyn King, the Bank of England governor, urged lawmakers to speed things up, not slow down.
"The faster we make the switch, the better," he said in an appearance before a parliamentary committee. He added that "we need a clear legislative framework" to resolve uncertainty about the shape of the U.K.'s regulatory system.
The government hasn't yet introduced legislation in Parliament to restructure the system; that's expected by summer. The bill will be subject to modification and approval by legislators.
But the wheels are already in motion at the Bank of England and Financial Services Authority.
Bank of England officials are preparing to relocate the FSA's army of bank supervisors to the City of London, the traditional financial district and where the Bank has been headquartered since 1734, according to people familiar with the matter. The FSA is currently based in a skyscraper in Canary Wharf, more than three miles to the east. Bank of England officials are scouting for new office space in the one-square-mile City to house FSA employees near the Bank's already-full headquarters, these people said.
Meanwhile, Andrew Bailey, a senior manager at the Bank of England who will become a top regulatory official under the new regime, next month will be setting up shop in the FSA's headquarters to help manage the transition, say people familiar with the matter.
The FSA is taking its own steps. It recently recruited Martin Wheatley, the head of Hong Kong's securities regulator, to run its consumer and markets unit. Under the government's restructuring plan, that body will be spun off into a new agency, the Financial Conduct Authority, responsible for consumer protection and other matters.
On Tuesday, Mr. King confirmed that when the Bank takes responsibility for financial supervision, it plans to back away from the FSA's detail-oriented approach to day-to-day oversight— a practice that the banking industry has complained is intrusive, unnecessary and counterproductive.
The Bank plans to "focus on the big issues" and will be "spending less time worrying about the details," Mr. King said.
The Bank's hope is that the new stance will help regulators spot systemic risks without getting bogged down in minutiae. Skeptics worry it could allow banks to more easily circumvent U.K. and international rules.