Ministers pressed ahead with plans to grant the government “call in” powers to intervene in financial regulation yesterday, just one day after City watchdogs underlined the importance of regulatory independence to financial stability.
Speaking in the Commons, City Minister Richard Fuller said it was “right for the democratically elected government of the day able to intervene in a matter of financial services regulation” where there was public interest.
The government will bring forward an amendment to the Financial Services and Markets Bill that would offer “intervention power” and allow the Treasury to “direct the regulator, amend and revoke rules where there are matters of significant public interest”, Fuller said.
Former Chancellor Rishi Sunak, who oversaw much of the bill’s creation with City Minister John Glen, backed Fuller’s comments in the chamber and called on the government to “quickly bring forward” the plans.
“It must be right for a democratically elected government with the consent of this house on an exceptional basis,” Sunak said.
City regulators are on course for a potential shake-up as new prime minister Liz Truss reportedly mulls a review of the mandate of regulators, with ministers looking to boost accountability of the City’s watchdogs in a bid to prioritise growth and competitiveness.
However, the FInancial Conduct Authority and the Prudential Regulation Authority this week doubled down on their independence and insisted it was vital to the financial stability of the country.
The PRA, which supervises the UK’s banking and insurance sectors, said that regulators should not come under “undue pressure to weaken regulatory standards” or “accept changes that could impede our ability to achieve our primary objectives”.
Labour MPs warned of a “power grab” in the commons yesterday as the government looks to speedily overhaul financial legislation.
Emma Hardy, MP for Kingston upon Hull West and Hessle said “the problem lies is how much power is going directly to the Treasury and bypassing Parliament entirely”.