Pilloried and applauded since it was first introduced, the “twin peaks” approach to prudential regulation is now to be practised by the UK’s Financial Services Authority (FSA).

Fifteen years after the creation of the Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC) prompted heckles from British financial quarters, FSA CEO Hector Saints has announced the UK will follow suit by early next year.

Australia and the Netherlands, which followed the former’s lead by splitting oversight between the Dutch Central Bank and the Authority for Financial Markets (AFM) in 2002, are the only countries currently operating a twin peaks model.

In October 2008 a Group of Thirty (G30) report on the structure of financial supervision found Australia and the Netherlands have the most effectively regulated regimes in the world.

Mr Sants told a gathering of British bankers this month a twin peaks regulatory authority was “an opportunity not to be missed”.

The new model for the prudential regulation and enforcement of banks, building societies, insurers and major investment firms will be operating under the FSA from April 2, with a complete break made by early next year.

Prudential supervision will be handled by a new subsidiary of the Bank of England, while the standalone Financial Conduct Authority will ensure financial firms and markets comply with market rules.

Mr Sants says the twin peaks model represents a move away from the “old style reactive approach” towards a forward-looking, judgement-based method.

“It is really important that we must have this opportunity to accelerate the behavioural and cultural change needed in both regulators and firms,” he said.

This month the FSA requested a 15.6% increase in funding for its final year as a regulator to £578.4 million ($852 million).