The current chair of the Bank of England’s court of directors Sir David Lees will stay in the role to oversee the switch to the new regulatory structure.
Lees became chair of the court in June 2009 and will now stay in place until the end of 2013 after a recommendation from the Prime Minister for his re-appointment was approved by the Queen.
The court has been at the centre of a row over its ability to hold the Bank to account when it takes on considerable new powers under the new regulatory system. Labour and the Treasury select committee wanted the court abolished and replaced with a more rigorous “supervisory board” so it could more effectively scrutinise the powerful tools which are expected to be given to the Financial Policy Committee to “protect and enhance” financial stability in the UK.
But, the Government has refused to budge. Instead it is backing a proposal from the Bank itself for an “oversight committee” to be set up under the court which can commission internal and external reviews of the Bank’s financial stability work.
In March 2011, Lees and other court members appeared before the TSC to discuss its role at the Bank. Shadow Business Secretary Chuka Umunna told Money Marketing that he was “distinctly unimpressed” with their performance, adding Governor Mervyn King has the court “under his thumb”.
Court chairs are appointed for three year terms and Lees’ will start in June 2012. But, he says he will step down at the end of 2013, once the new regulatory structure is in place. Under proposals in the financial services bill, currently going through Parliament, the FSA will be abolished. In its place the Bank will be home to the Prudential Regulation Authority and the FPC while the independent Financial Conduct Authority will regulate markets.
The Treasury select committee has said the regulatory shake-up will make the Bank a “super-regulator” and has called for radical changes to its accountability structures. Despite this, in Parliament earlier this week, TSC members and Conservative MPs Jesse Norman and Mark Garnier helped defeat a Labour proposal to change the court into a supervisory board as the committee had called for.