The Treasury Committee has released a new report to help improve the UK's financial stability following the Northern Rock crisis.
Entitled Banking Reform, the report contains a number of recommendations to the role in which the Financial Services Authority (FSA) will play in relation to failing financial institutions.
According to ifaonline.co.uk, the report claims the FSA should be granted powers to make firms subject to a Special Resolution Regime (SRR) or heightened supervision, with the Bank of England given legislation to recommend potentially struggling firms to the FSA.
John McFall, chairman of the committee, told the site the FSA's role as "the regulator" should give it "sole authority" to place firms under a SRR.
"The system we propose maintains a clear line of authority, while ensuring that the Bank of England has a reason to engage with individual institutions," he added.
Michael Baxter, economist at Defaqto, claims the collapse of Lehman Brothers bank demonstrates that the credit crunch is not over and UK banks may be "more reluctant" to lend to each other.
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