The Treasury Select Committee’s Chairman has asked the Chancellor for veto powers on any future hirings and firings of the regulator’s bosses.
Andrew Tyrie addressed George Osborne in a letter sent yesterday (26 January) to reiterate previous calls in 2012 for a parliamentary veto on appointment and dismissal of the FCA and the Prudential Regulation Authority (PRA) chief executive.
This follows the announcement that Andrew Bailey is to take over as the FCA’s chief once a replacement can be found for him as chief executive of the PRA.
Mr Bailey’s appointment comes after HM Treasury effectively ousted his predecessor Martin Wheatley last summer.
Mr Tyrie’s concerns were heightened by suspected Government intervention in the FCA’s decision to drop a review into banking culture on New Year’s Eve – something which his committee grilled the regulator’s bosses about earlier this month.
“Allegations have been made that the FCA has been vulnerable to political pressure, influencing the way that it approaches the fulfilment of its statutory obligations. Whatever the substance of these allegations, and there may be none, the perception of them may remain,” the letter read.
It added: “It is partly the need to address these concerns, and to entrench the FCA’s independence, that has led the committee to conclude that it requires a veto on both the appointment and the dismissal of the FCA’s senior leadership.”
The committee currently only has veto powers over senior appointments made to the Office for Budget Responsibility (OBR), something which Mr Tyrie would like to see extended.
The letter continued: “The Treasury Select Committee would welcome assurances that you will put in place a similar veto [to the OBR] on the appointment and dismissal of the chief executives of the FCA and PRA.
“A first step would be a personal assurance that you will not make an appointment or decision on an incumbent without the prior agreement of the Committee.”
Garry Heath, Director General at Libertatem, backed Mr Tyrie’s demands, although he doubted whether the Chancellor will heed them.
He said: “Parliament must have some influence, because currently we have a notionally independent regulator, told what to do by the Treasury and key players, who are in turn leaned on by the big banks threatening to leave the UK.”