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Davies gets public rebuke from Brown

The Chancellor has publicly warned FSA chairman How-ard Davies to keep the Trea-sury informed about any problems which may lead to the Government facing criticism, a move some commentators say is a dressing down.

Opposition politicians bel-ieve that the warning, in the form of a letter to Davies, is the result of Treasury embarrassment over the Equitable Life debacle.

The letter makes clear the FSA is expected to inform the Government about any potential crises that may arise, especially if the Treasury may have to become involved.

Brown&#39s letter says: “I am setting out today how I propose to use my legislative powers so we can all be satisfied the FSA is meeting its objectives and the accountability process works as effectively as possible.

“Now that the FSA has assumed its full powers, I and the chairman of the FSA have set out explicitly how the FSA will keep the Government informed of regulatory cases with serious and wider implications.”

In response, Davies has written to Brown saying: “We recognise and welcome the accountability which justifies this independence. In particular, we believe it is right that ministers should seek to reassure themselves that the FSA is meeting its regulatory objectives.”

One industry observer says: “I think it was a shot across the bows. There is a view in the Treasury that we make the policy, you implement it. Just after they have given them more power, they want to remind them of who is in charge.”

Conservative Shadow paymaster general Howard Flight says: “I see Brown&#39s letter as very much prompted by the Equitable Life saga. The Government and Treasury do not want to be caught off guard by as significant a problem as this nor be open to criticism themselves.”

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