Chancellor George Osborne to hand powers to Bank of England

Chancellor George Osborne has confirmed that he will give the Bank of England the key role in regulating the UK financial sector, according to the BBC.

Speaking in the House of Commons, Osborne said the current system of financial regulation had "failed spectacularly."

Osborne is due to give more details of his plans in his first Mansion House speech tonight.

But he confirmed plans to dismatle the existing regulatory systems, led by the Financial Services Authority, in answer to a question from shadow chancellor Alistair Darling.

Mr Osborne said: "On the structure of regulation, our plan is to hand over to the Bank of England responsibility for macro-prudential supervision, that should never have been taken away from it."

Before the general election, Osborne had suggested he would abolish the FSA.

He also told the Commons that the government is "committed to handing over micro-supervision to the Bank," rejecting claims that the regulator would be retained in some form

Darling told the Commons the changes would lead to confusion and risked creating "a dog's breakfast of a regulatory system".