UK Treasury Committee publishes report on the Financial Services Bill
08 June 2012
With the Financial Services Bill about to undergo detailed scrutiny in the House of Lords, the Treasury Select Committee published a further report setting out its main outstanding concerns and some proposed remedies.
Commenting on the publication of the report, the Chair of the Treasury Select Committee, Andrew Tyrie MP, said:
"The Financial Services Bill is the most important overhaul of financial regulation ever undertaken in this country. It is crucial that we get it right. This Bill will transform the regulation of Britain’s leading global industry.
The work of the Treasury Committee and the Joint Committee has secured improvements in some areas. We also forced a commitment from the Government, at Report Stage in the Commons, to look again at the Bank of England’s current antiquated corporate governance, and its accountability to Parliament. This now needs to be given effect in the Lords.
The Bank must not be permitted to carry on with an outdated Court. We must ensure that the Court can operate, as far as possible, according to corporate governance best practice.
Instead of drafting a fresh Bill, the Government has presented Parliament with multiple amendments to the already extremely complex Financial Services and Markets Act. The proposed legislation is therefore much more complicated than it need have been.
No explanation has been given for the rush to produce the Bill and place it on the Statute Book by the end of the year. Better to take a little more time, and get it right, than rush it.
Much remains to be done. I hope our report will be of use to all those with an interest in securing further improvements to the Bill."
Key Issues
Some of the key issues and recommendations contained in the report, all of which are drawn from previous Treasury Committee reports, include:
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that, following undertakings from the Minister in the House of Commons, the Court of the Bank of England should be given the statutory duty to undertake retrospective reviews of the Bank’s performance, including on the merits of policy. These should not be published less than a year after the period to be reviewed (p18-19, paras 22-24);
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that, when public funds are at risk, the Chancellor of the Exchequer should be given the general power to direct the Bank of England, rather than the circumscribed powers currently provided in the Financial Services Bill (p21, para 34); whether the Treasury Committee should have a role in the appointment and dismissal of the Governor of the Bank of England (p20, para 28);
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amending the Bill to make competition an objective of the Prudential Regulation Authority (p33, para 57);
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examining whether there is a way of requiring the Financial Conduct Authority in legislation to publish board minutes while not setting a precedent on the degree of intervention in how boards function (p34, para 61);
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amending the Bill to ensure that Parliament, through the Treasury Committee, may request retrospective reviews of the Financial Conduct Authority’s work (p35, para 63).
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