The Treasury has shelved plans to unveil its vision for the future of financial regulation next week because it does not want to be overshadowed by a rival initiative from Lord Mandelson to launch a wide-ranging crackdown on consumer abuses.

Lord Mandelson, the Business Secretary, who gained enhanced powers this month in a Cabinet reshuffle, is planning to unleash sweeping reforms designed to stop controversial practices by credit card groups and other non-mainstream lenders.

Among the activities that will be banned are credit card companies increasing customers’ spending limits without consulting them and forcing the providers to make a priority of using customers’ repayments to reduce the loans that are on the highest rates. Some card firms direct customers’ payments to the least expensive debt first, so maximising their profits.

Lord Mandelson, who has faced accusations of dramatically enhancing his fiefdom with the creation of his new Department for Business, Innovation and Skills, is planning to publish his White Paper on Thursday.

The timing means that he will be able to trumpet the reforms to MPs on the Commons Business and Enterprise Committee a week on Tuesday.

However, his plans have derailed the Treasury’s intention to publish its eagerly anticipated document, which was also due on Thursday.

Instead Alistair Darling, the Chancellor, is expected to publish the document the following week.

The delay may be seen as another setback for the Treasury, but it may also give the Chancellor more time to try to resolve disagreements over the details. The Treasury has been caught up in a row with the Bank of England and Financial Services Authority (FSA) over who should wield the ultimate authority in regulating banks, in order to prevent a repeat of the mistakes that led to the financial crisis last year. Mervyn King, the Governor of the Bank, sparked a furore with his Mansion House speech last week when he openly challenged some aspects of the Chancellor’s approach.

The Treasury’s paper will be something between a White Paper, which lays out detailed policy plans for reform, and a Green Paper, which sets the debate for wider consultation.

It is expected to map out a new approach to regulation — which will focus on spotting broad risks to the financial system as well as looking at individual firms — but it will not spell out who should wield specific powers.

Treasury insiders denied that plans to extend the role of the FSA in policing banks would risk fuelling conflict with the Bank. Officials confirmed that a new Banking Act this autumn will give the FSA a wider remit encompassing the overall stability of the financial system. But insiders insisted that the shift in the FSA’s role would not create an overlap with the Bank of England’s responsibilities.

In a move that officials insisted was mainly technical, the changes will place a statutory duty on the FSA to consider the impact on the wider stability of the financial system as it carries out its oversight of individual institutions. While the FSA will therefore have to consider implications for the system as a whole, it will remain the Bank’s job to oversee that system and ensure its stability, officials said.

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