The Chancellor has defended the decision not to include a requirement for a member of the Financial Policy Committee to have an insurance background in the Financial Services Bill.
The FPC will be charged with spotting and dealing with threats to the UK financial system and George Osborne told MPs last night prescribing the necessary qualifications of its external members would be a mistake.
During a House of Commons debate on the bill, all-party Parliamentary group for insurance and financial services chairman Jonathan Evans said the joint committee on the draft bill had recommended the FPC have a member from the sector and asked Osborne why he had not included the recommendation in the bill.
Osborne said: “We do not want to prescribe in the Bill the qualifications of the external members of the FPC. That would be a mistake. However, I would obviously want to ensure that the external members have broad and current experience of the financial system. We have to make a trade-off between appointing as external members to such bodies people who actually know what is going on in financial services and, at the same time, wanting to avoid direct conflicts of interest, being careful not to rule out anyone simply because they work in financial services.”
The interim FPC is currently preparing for its formal launch next year. It currently has no members with an insurance background. In June, the Treasury select committee raised concerns about the appointment of Alastair Clark who worked at the Bank of England and the Treasury for over 40 years. TSC member and Conservative MP Michael Fallon called him the “ultimate insider”.
The other four external members of the FPC are ex-Deutsche Bank head of global banking and co-head of investment banking Michael Cohrs, former US Federal Reserve vice chair Donald Kohn and ex-IMA chair Robert Jenkins.
In July, Shadow Treasury financial secretary Chris Leslie said he wanted to see the membership of the FPC widened beyond just financial services with members for businesses and consumers.