Simoney KyriakouSep 14 2020

Who pulls the strings on regulation?

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Who pulls the strings on regulation?
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Press photos of the new Spitting Image puppets have been published, heralding the return of the satirical show. 

Seeing representations of MPs as puppets brings to mind the old adage ‘the puppet master pulls the strings’. It also calls to mind the question of who really is pulling the strings in Westminster when it comes to financial services regulation. 

The government does not have lien over the Financial Conduct Authority or the Prudential Regulation Authority or the Bank of England. On the government website, under the sub-heading ‘Who does the FCA report to?’, it states the FCA “works with HM Treasury”. Not ‘for’.

It has been called to account, however. The Treasury Committee has, on many occasions, called the FCA in to respond to perceived failings. The Complaints Commissioner, Anthony Townsend, also has a role of oversight of the FCA. 

But how much mastery do these bodies have over the machinations of financial regulation? This is what MPs and advisers are now asking in their letters to the Treasury, to various select committees, to Sir Anthony and to others who may have a measure of authority when it comes to agreeing and signing off on budgets or spending plans.

The Treasury Committee has on many occasions called the FCA in to respond to perceived failings

For those advisers who have simply been told that ‘government does not regulate the regulator’, and therefore must complain to the FCA itself, this must be disappointing. 

Indeed, last week the Treasury told Financial Adviser the same thing – namely that the FCA operates its own financial strings: “The FCA operates independently... and is responsible for setting the regulatory fees on industry.”

But there is some measure of hope. The Treasury also said: “We are working with the FCA to support its monitoring the impact of the increased regulatory fees.”

Let’s hope that somewhere in the marionette world that is Whitehall, someone, somewhere is using their influence to help make fees fairer.