In response to pressure from the Treasury Committee and the Joint Committee, among others, some recommendations for improvement have been accepted, in whole or in part.
Commenting on the publication of the report, the Chair of the Treasury Select Committee, Andrew Tyrie MP, said:
"The Financial Services Bill is the most important overhaul of financial regulation ever undertaken in this country.
It is crucial that we get it right. This Bill will transform the regulation of Britain’s leading global industry.
The work of the Treasury Committee and the Joint Committee has secured improvements in some areas.
We also forced a commitment from the Government, at Report Stage in the Commons, to look again at the Bank of England’s current antiquated corporate governance, and its accountability to Parliament. This now needs to be given effect in the Lords.
The Bank must not be permitted to carry on with an outdated Court. We must ensure that the Court can operate, as far as possible, according to corporate governance best practice.
Instead of drafting a fresh Bill, the Government has presented Parliament with multiple amendments to the already extremely complex Financial Services and Markets Act. The proposed legislation is therefore much more complicated than it need have been.
No explanation has been given for the rush to produce the Bill and place it on the Statute Book by the end of the year. Better to take a little more time, and get it right, than rush it.
Much remains to be done. I hope our report will be of use to all those with an interest in securing further improvements to the Bill."
Some of the key issues and recommendations contained in the report published today, all of which are drawn from previous Treasury Committee reports, include (listed in full on pages 5-7):
- that, following undertakings from the Minister in the House of Commons, the Court of the Bank of England should be given the statutory duty to undertake retrospective reviews of the Bank’s performance, including on the merits of policy. These should not be published less than a year after the period to be reviewed (p18-19, para 22-24);
that, when public funds are at risk, the Chancellor of the Exchequer should be given the general power to direct the Bank of England, rather than the circumscribed powers currently provided in the Financial Services Bill (p21, para 34);
whether the Treasury Committee should have a role in the appointment and dismissal of the Governor of the Bank of England (p20, para 28);
amending the Bill to make competition an objective of the Prudential Regulation Authority (p33, para 57);
examining whether there is a way of requiring the Financial Conduct Authority in legislation to publish board minutes while not setting a precedent on the degree of intervention in how boards function (p34, para 61);
amending the Bill to ensure that Parliament, through the Treasury Committee, may request retrospective reviews of the Financial Conduct Authority’s work (p35, para 63).
Some of the Treasury Committee recommendations accepted wholly or in part, in the Financial Services Bill include:
- <>The Governor will now serve for a single 8 year term
- The Government will take into account financial experience in future appointments to the Court of the Bank
- The Financial Policy Committee will now be required to respond publicly to the Treasury’s recommendations on its remit, how it will comply and reasons if it does not intend to act in accordance with the remit
- Provision will be made to allow joint meetings of the MPC and FPC