Chancellor Gordon Brown has written to Howard Davies demanding he inform the Treasury of any serious problems that arise which may lead to statutory inquiries.
The letter sets out Brown's expectations of the FSA in keeping the Government up to speed on its regulatory activities. It is likely the letter is due to the Equitable debacle, which saw the Treasury and individual ministers dragged through the mud.
It said: “The FSA is independent of Government, but it is important that the FSA and its Board can be called to account by both the Government and Parliament and fully recognises the interests of all its stakeholders.
I am therefore setting out today how I propose to use my legislative powers so that we can all be satisfied that the FSA is meeting its objectives and that accountability process works as effectively as possible.”
Davies replied: “We attach great importance to being an open, transparent and accountable regulator. The Chancellor's letter sets out clearly in public the respective roles and responsibilities of the FSA and the Government and how we will account for our actions to the public and Parliament.”