The government has been criticised by the interim chair of the Treasury committee for its approach to the scrutiny of regulators after the delay of controversial “call in” powers.
Dame Angela Eagle today (November 1) urged the government to allow the powers to be scrutinised by parliament.
“The government’s proposed ‘call in’ power is controversial and potentially risky,” she said in a letter to the economic secretary Andrew Griffith.
These powers would give the Treasury the authority to force regulators like the Bank of England to make, amend or revoke rules if it was in the public interest.
They have been heavily criticised by the Financial Conduct Authority and the BoE, with the latter’s deputy governor for monetary policy saying they could hamper growth and result in the UK’s financial services sector being eschewed by foreign companies.
The powers were due to be included in an amendment to the financial services and markets bill at the committee stage, where it currently sits.
However in a letter yesterday, Griffith said that in light of the new prime minister these changes will not be made in time for the stage’s deadline.
He said the government has been clear that a “public interest intervention power” would “only” be used in exceptional circumstances, and “must” be accompanies by appropriate safeguards.
“But it is right for the democratically elected government of the day to be able to intervene in financial services rulemaking, in the public interest,” he said.
In her response to the letter, Eagle urged Griffith to confirm that the power be introduced in the House of Commons to enable MPs to examine it.
She also asked whether the government will consult regulators on the move, and asked for “adequate time” for the committee to take evidence, scrutinise and table amendments to the new element of the legislation.
The bill was introduced to parliament this summer, and repeals EU rules over the British financial services industry.
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 Treasury said yesterday that the amendments to the bill, which add in the “safety valve” of call-in powers, would be introduced in the committee stage after chancellor Jeremy Hunt had finalised the precise mechanics of it.
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”.