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The government is to ensure that the soon to be created division of the FSA, the Financial Conduct Authority, will have significantly broadened enforcement powers.

It will be given new powers to warn consumers about imminent enforcement action before the firm has the chance to appeal the case to an internal body.

Mark Hoban, financial secretary to the Treasury, told the Financial Times the Financial Services Authority (FSA) will be split into a consumer champion and two other regulators.

The Consumer Protection and Market Authority (CPMA) will be renamed the Financial Conduct Authority (FCA) and headed by Martin Wheatley.

Hoban told the newspaper the FCA would have powers to penalise banks, brokers and individuals before they can appeal, putting UK regulation in line with that in the US.

‘It is a radical reform but the lessons of the financial crisis is that you need to have proper focus and clear mandates and the mandates need to be underpinned by the powers to do the job,’ he said.

The move to rename the CPMA was to emphasise the focus on the body’s new focus, said Hoban.

‘This is a conduct body. Whether you are buying an insurance policy from a high street broker or you are trading high finance, the FCA is your conduct regulator. It does what it says on the tin.’

The FCA will work to foster competition and improve market efficiency and market confidence. It may also be given joint jurisdiction with the Office of Fair Trading to undertake internal competition inquiries.