The Bank of England and Financial Conduct Authority could be pitted against parliament after the government confirmed it will continue with plans to allow the Treasury to force regulators to make, amend or revoke rules.
The controversial “call-in powers”, which are to be included in an amendment to the financial service bill, will allow the government to instruct regulators to change rules if deemed in the public interest.
The call-in powers were initially proposed by prime minister Rishi Sunak when he was chancellor, however they were omitted from the financial services and markets bill earlier this year on the request of then-chancellor Nadhim Zahawi.
The bill was introduced to parliament this summer, and repeals EU rules over the British financial services industry.
A spokesperson for the Treasury said today (October 31) that it intends to bring forward the amendment.
“The government has always been clear that this is a safety valve that must be balanced with clear accountability, appropriate democratic input and transparent oversight.”
FTAdviser understands the change will take place during the committee stage of the bill, where it currently sits, after the chancellor Jeremy Hunt has taken a final decision on the precise mechanics of the power.
They have been heavily criticised by the FCA and BoE.
Jon Cunliffe, deputy governor for monetary policy at the central bank previously said the powers could hamper growth and result in the UK’s financial services sector being eschewed by foreign companies.
“The bill gives us flexibility…but that needs to be underpinned by a strong regulatory framework and independent regulators and that is best practice in most advanced economies,” Cunliffe said.
At a dinner last week (October 27), Sam Woods, chief executive of the Prudential Regulation Authority and Nikhil Rathi, head of the Financial Conduct Authority, warned about the change, which Woods said would represent a “significant shift” away from a model of independent regulation.
Rathi said: “[it is] vital that [the FCA’s] independence and agility at speed [was] not undermined by any proposed call-in power”.