Britain’s Conservative Party Opposition – which is widely expected to easily win the next UK election due within 10 months – has revealed plans to abolish the Financial Services Authority (FSA).

At a launch of the party’s white paper on banking last week, Shadow Chancellor George Osborne called for supervisory reform, describing existing regulation as a failure.

The Conservatives have pledged to fold the FSA’s functions into a “strong and powerful Bank of England with the authority and powers necessary to ensure financial stability”.

At present the FSA works within a tripartite system that also includes the Bank of England and the Treasury.

The Tories plan to form a consumer protection agency and demand that banks set aside “much more of their own money for their risky lending as a form of insurance policy”.

They have also pledged to apply greater scrutiny to the consolidation in the retail banking sector and have more input into European Community regulations.

Last month FSA Chairman Lord Turner promised “a revolution” in the authority’s approach to the supervision of banks after the regulator failed to prevent the near-collapse of a succession of British banks, forcing the Government to prop up the industry.