The UK launched its new system of financial supervision yesterday, putting its faith in a ‘twin peaks’ system of two new regulators.

Scrapping the 12-year-old Financial Services Authority, the reform introduced two separate bodies which are expected to be more attentive to risky practices.

A Prudential Regulation Authority will be responsible for making sure banks are sound, while a Financial Conduct Authority will shield customers from mistreatment.

However, critics are keen to point out that the new system will not be properly tested until the UK returns to economic prosperity, when the regulators will have to prove that they can control banking excesses.

Peter Snowdon, a financial services lawyer at Norton Rose, said: ‘The new system is designed to deal with the problems that happened yesterday. No regulatory system has managed to be entirely successful in any crisis.’

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