Commentators say the bill would potentially give the new Financial Conduct Authority, which will in part replace the Financial Services Authority, the power to ban products for up to a year and give the FCA a wider remit than expected. If this goes ahead and the bill becomes law it would be the first time a regulator has had the power to ban financial products before they were launched.

Financial Secretary to the Treasury Mark Hoban has announced a new regime which he said would "set out a clear, coherent and comprehensive regulatory framework, replacing the uncertainty and inadequacy of the previous structure, and helping to mitigate against future risks to stability."

The Bill:
• Gives the Bank of England responsibility for protecting and enhancing financial stability, bringing together macro and micro prudential regulation;
• Abolishes the Financial Services Authority (FSA) and creates a strengthened regulatory architecture consisting of the Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority, also providing them each with clarity of responsibility and the necessary powers to ensure the stability of the financial sector and the protection of consumers; and
• Empowers authorities to look beyond 'tick-box' compliance and fosters a regulatory culture of judgment, expertise and proactive supervision.
• Today's Bill has been shaped by extensive consultation with both stakeholders and Parliament and, while the fundamental elements of the new framework are in line with the model put forward by the Chancellor in 2010, contains a number of refined policy proposals, including measures to:
• Legislate for a new crisis management regime, providing greater clarity and accountability to protect the taxpayer during times of crisis by providing the Chancellor with new powers over the Bank of England where public money is at risk; and
• Transfer responsibility for regulating consumer credit to the Financial Conduct Authority to better protect consumers.

Mr Hoban said: "This Government has taken the necessary action to tackle the difficult and dangerous legacy left behind by the financial crisis, including a tripartite structure not fit for purpose. We've listened to the views of stakeholders following an unprecedented period of consultation, and are determined to strengthen the financial system in a way that safeguards financial stability and protects consumers."

In his Mansion House speech on 15 June 2010, the Chancellor of the Exchequer, George Osborne MP, outlined the Government's plans for reforming the regulatory system, including the creation of an independent Financial Policy Committee at the Bank of England, a new prudential regulator as a subsidiary of the Bank (the Prudential Regulatory Authority), and a new independent conduct regulator (the Financial Conduct Authority).

Today's Government White Paper and draft Bill follows three detailed consultations. In July 2010, the Government published 'A new approach to financial regulation: judgement, focus and stability'. In February 2011, the Government published 'A new approach to financial regulation: building a strong system'. In July 2011, the Government published 'A new approach to financial regulation: the blueprint for reform', which included draft legislation.

Second Reading of the Bill is provisionally scheduled to take place on 6 February, and Royal Assent is sought by the end of the year.
The Bill and accompanying documents can be found on the Treasury website.

Following the publication of the bill, Otto Thoresen, director general, ABI said: "The first reading of the Financial Services Bill is an important milestone in the move to twin peaks regulation. We are pleased to see that the new conduct regulator's main focus will be on making sure that financial markets work well. The FCA must promote positive outcomes for consumers, rather than just focus on avoiding negative outcomes.

"Firms now need a clear and realistic timetable for the remainder of the transition which takes in secondary legislation, as well as the parliamentary stages of the Bill, and includes a period for firms to update their systems and customer communications. The FSA must ensure that they do not overburden firms in the transition as it is vital that we get the right result on initiatives including Solvency II and the Retail Distribution Review."