Report calls for change in BoE’s accountability
The government should be responsible for governance of the Bank of England and not the Bank itself, MPs have claimed.
In its second report on the Financial Services Bill, the Treasury select committee highlighted other ways the Bank, which will hold the main regulatory powers under the incoming regime, could be held accountable.
The committee said: “A concern of the committee has been to ensure that adequate internal checks and balances exist on the powers of the Bank. The current corporate governance of the Bank is well short of what would be expected in a modern institution, whether public or commercial.
“This is especially important given that vitally important decisions made by the Bank’s executives, especially during times of financial instability, may not reasonably be made public and therefore be immediately available for scrutiny.”
On accountability, the report said: “We note that the government believes that in general the governance of the Bank should primarily be a matter for the Bank itself. We disagree.
“The government, accountable to parliament, is the only shareholder of the Bank and many of the Bank’s responsibilities and functions are defined in legislation. Therefore the government, accountable to parliament, is responsible for the structure of the governance of the Bank, the crucial aspects of which should not be delegated.”
The report also said the committee would like the House of Lords to consider allowing the committee a veto over the appointment of the Bank’s governor and also warned about the risk of “group think” as both the Financial Policy Committee and the Monetary Policy Committee have Bank executives in the majority.