Watchdog criticism for the Bank

Financial Services Authority chief executive Hector Sants told lawmakers the Bank has admitted to errors but in a "more elaborate and lengthy process" than the FSA has.

"The FSA had a cleaner, more straightforward approach to fessing up," Mr Sants said.

Few central banks or regulators spotted the global crisis coming, forcing policymakers in Britain and, again this week in Ireland, to take radical and expensive steps to shore up banks.

Britain is scrapping the FSA and handing many of its supervisory powers to a new prudential regulatory authority at the BOE that will be headed by Mr Sants to plug gaps seen during the crisis.

"The level of communication, the level of interest in the central bank on financial stability issues, I think, was recognised by all to be very low in the pre-2007 period," he told parliament's treasury select committee.

The planned Financial Policy Committee (FPC) to be based at the Bank, and the central bank itself, must lead on financial stability in future, Mr Sants added.

Financial firms fear the revamp of supervision will be disruptive, expensive and weaken the country's ability to shape European Union financial rules.

Some top FSA staff have already left ahead of the reorganisation but Mr Sants said he was confident the new system will be put in place in time for the 2012 deadline even if there are some internal distractions along the way.