March 19 (Bloomberg) -- Chancellor of the Exchequer Alistair Darling, seeking to break with an approach that underpinned British financial regulation for more than a decade, said he never favored “light touch” supervision for banks.

The comments mark a break from the approach favored by Prime Minister Gordon Brown and allies such as Children’s Minister Ed Balls when they were at the Treasury. Darling said financial regulation from now on needs to be “more intrusive.”

“I have never been an advocate of light touch regulation,” Darling told lawmakers in London today. “Yes, there were people 10 years ago and some rather more recently arguing for further deregulation and what you might call a light touch, but that’s not been my view.”

The U.K.’s financial regulator, in a report calling for “profound” regulatory change in the wake of the global financial crisis, yesterday demanded greater powers to oversee risks to banks and the economy. Darling is preparing to enact the changes and is due to unveil them on April 22.

The Financial Services Authority said it will guard against too much risk at banks by forcing them to build up capital buffers and by scrutinizing their business strategies. The regulator also should join the Bank of England’s Financial Stability Committee, FSA Chairman Adair Turner said yesterday in his report responding to the 20-month long crisis.

Brown, Balls

Through his decade as Chancellor of the Exchequer, Brown promised to strip bank regulation across business and streamlined regulatory bodies, often at the insistence of groups such as the Confederation of British Industry.

In his first speech as Treasury Minister, Balls in 2006 said the government’s “light-touch” regulatory approach is a competitive advantage that should be preserved. A year later, he claimed that the approach had helped London overtake New York as the world’s biggest international financial center.

Darling, seeking to play down any rift with Brown, today suggested that the opposition Conservative Party had wanted go further than the government in deregulating.

Darling also said that it is a “false dichotomy” to regard regulation as light touch or heavy handed and that he still favors principles-based rules.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

Last Updated: March 19, 2009 15:21 EDT