MPs will be given the power to say yea or nay to the top role at the City watchdog, thanks to a legal amendment agreed on today.
The proposed clause for the Bank of England and Financial Services Bill means that government will have to seek approval from parliament, particularly the Treasury Select Committee, for any future chief executive appointments for the Financial Conduct Authority (FCA).
In a letter to Andrew Tyrie, chairman of the Treasury Select Committee, chancellor George Osborne remarked that scrutiny of such appointments by the committee was "important and welcome", before explaining that, in the future, the committee would be able to hold a hearing about potential chiefs of the FCA after the announcement was made but before it is formalised.
The rule would not apply to Andrew Bailey, who was recently announced as the new head of the FCA, but it would apply to his successor.
Commenting on the letter, Tyrie said: "The FCA needs demonstrably independent leadership. Parliament’s, and the committee’s, influence over the appointment and dismissal of the chief executive of the FCA has been greatly strengthened by the arrangements set out in the chancellor’s letter. Parliament will now be better placed to safeguard the FCA from interference - or the perception of interference - by the Treasury or Treasury ministers."
The amendment was put forward by the Treasury Select Committee in February, shortly after Bailey was announced as the incoming chief executive.
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Former FCA chief executive Martin Wheatley was ousted from his role last summer, while acting chief executive Tracey McDermott was revealed to have pulled out from the running for the permanent slot earlier this year.
Elly Proudlock, counsel in WilmerHale’s UK Investigations and Criminal Litigation team, said of the announcement: "As we all know, the perception of independence is as important as the reality. The FCA was heavily criticised over its decision to abandon the review into banking culture last year, and could do with the perception of its independence being bolstered. Cross-party scrutiny in the appointment of the FCA’s senior leadership is a step in the right direction."