The Financial Conduct Authority does not need any further oversight to make sure it stays in line, a leading group of MPs has said.
Amid a raft of recent regulatory failures including the collapse of Neil Woodford’s fund empire, mass mis-selling of pension transfers, and widespread investor losses from mini-bonds, calls have grown in recent months to ensure the financial regulator bears sufficient scrutiny for its work.
Currently, the primary way the FCA is held to account externally is through regular questioning by MPs on the Treasury Committee.
In a report on the future of post-Brexit financial regulation published on 6 July, the Treasury Committee said that there was no need to bring in another entity to scrutinise how the FCA’s role evolved going forward.
“We do not see a clear need for the creation of a new committee or a new independent body to carry out this work,” the cross-party group of MPs tasked with holding regulators and the wider City accountable, said in its report.
“It would seem a more efficient use of parliamentary resources to use the structures that are already available in both Houses. Although the scrutiny task will be substantial, it will be an extended one as new regulations are drafted, rather than a short-term surge of activity.”
The report comes as the government seeks to give London a boost post-Brexit, with the Chancellor Rishi Sunak publishing a document outlining his plans to capitalise on the country’s split from the European Union earlier in the month, on the back of calls to liberalise regulations around the City’s listings and capital markets regime.
“Now that we’ve left the EU, we have a unique opportunity to take an approach that better suits our markets, while still maintaining high regulatory standards,” Sunak said in the 40-page roadmap for the UK finance sector.
In its inquiry, the group of MPs chaired by Conservative MP Mel Stride received “several” written submissions proposing a sub-committee or a new separate select committee tasked with overseeing financial services.
Innovate Finance, the financial technology lobby group, wrote: “With [the] increased role [for the regulators], we recommend that there is greater scrutiny of the regulators regarding the performance of their functions and rule-making than is currently the case”.
“Given the significant resource and expertise such scrutiny will require, we recommend such scrutiny should be performed by a new, independent committee set up for the purpose.”
Barclays and other industry groups including the Association of British Insurers and the Investment Association also suggested a joint committee with members from the House of Commons and House of Lords be created.
“A joint committee would potentially increase expertise and experience of the membership and provide extra resource to enable the committee to address a wide variety of policy matters,” Barclays wrote in its evidence.
The MPs’ report also highlighted the independence of regulators from political interference as a key aspect of financial services in the UK, adding that it was “essential” to ensuring it retains its status as a hub for the sector.
Former chancellor George Osborne gave the Treasury Committee one of its most significant powers to date in 2016; the MPs are now able to block a new FCA chief executive’s appointment and send it to a vote in the House of Commons.
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