British parliament seeks power to scrutinize financial services regulators


Britain’s financial regulators would be given greater control over their consumer and economic policies by parliament, at the suggestion of members of the House of Lords.

A new independent body could track progress against certain metrics, also giving elected officials more leeway to scrutinize their actions, according to proposed changes to draft legislation that will form the blueprint for the UK’s post-Brexit financial rules .

The proposals tabled by the House of Lords of the UK Parliament could revive last year’s debate on regulator independence. After a series of clashes, the Treasury dropped plans to give ministers the power to intervene in the actions of the Prudential Regulation Authority and the Financial Conduct Authority.

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But several members of the House of Lords are looking at ways to increase oversight based on objective criteria. Brexit will give regulators new powers, meaning the UK Parliament will need new processes to oversee them, those lawmakers think.

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Conservative colleague George Bridges has proposed a new watchdog: the Office for Financial Regulatory Accountability. Regulations need to be “robust, proportionate and consistent,” Bridges said. “I want to make sure there’s a level of accountability to make that happen.”

The new body could be similar to the Office for Budget Responsibility, which was set up in 2010 to carry out independent analyzes of UK public finances.

Hill support

Jonathan Hill, a fellow Conservative lawmaker who researched ways for the government to modernize the UK’s listing regime, supports the creation of an independent body to hold regulators accountable.

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“I don’t see that as a challenge to regulator independence, but as something objective that would build trust in the overall system,” Hill said.

Sharon Bowles, who sits in the House of Lords and was previously a Member of the European Parliament, is also calling for additional powers for the UK Parliament due to the complexity of financial services and their importance to the UK economy.

The House of Lords will begin a debate on the possible changes on Wednesday. They could be added to the Financial Services and Markets Act if they get enough parliamentary support.

The draft legislation will take effect in the spring and will cover areas ranging from crypto regulations to access to cash for consumers.

One of the biggest areas is setting the direction for the UK post-Brexit. Questions about how much freedom regulators should have to set policy and whether they should be required to take the UK’s international competitive position into account dominated debate over the legislation last year.

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Ultimately, the Treasury did include a requirement for the PRA and FCA to consider competitiveness a secondary objective after safety and soundness.

The abolished on-call worker was misunderstood, many in parliament believed, because it narrowly confers additional powers on the government. Instead, there could be broader parliamentary scrutiny and objective standards introduced.

Photo: Elizabeth Tower, aka Big Ben, and Westminster Bridge in London, UK, on ​​Monday, July 11, 2022. Photo credit: Jason Alden/Bloomberg

Copyright 2023 Bloomberg.

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