The British government has scrapped controversial plans to make a new white collar crime agency the lead prosecutor in securities law cases. The decision follows concern among lawyers that the move could weaken enforcement efforts.

The government still plans to create a new Economic Crime Agency to tackle fraud and financial crime, but it won't now be responsible for securities market offenses, such as insider dealing and market abuse. The decision was revealed in a consultation paper that sets out responses to the idea.

Enforcement of crime in this area was moving to the ECA as part of a complicated overhaul of enforcement agencies. The government is working on plans to abolish the Financial Services Authority and the Serious Fraud Office, moving their workload to two new agencies.

But lawyers warned that the original idea of moving all criminal matters to the ECA while making another new agency – the Consumer Protection and Markets Authority (CPMA) – responsibility for financial market regulation was a bad idea. Civil regulation and criminal enforcement should be under the same roof, they argued. The government has now accepted that argument.

In another strategy U-turn, the government has decided not to create a corporate governance “super regulator” by merging parts of the FSA's workload with the Financial Reporting Council (FRC), which sets governance rules and regulates both auditing and financial reporting.

The FSA's responsibility for setting listing rules will be moved to the new CPMA, while the FRC will carry on doing the job it does now.