The Financial Policy Committee should have a public interest objective in addition to its primary function of ensuring financial stability to make sure that consumers are considered, says the Financial Services Consumer Panel.
Panel chairman Adam Phillips told the Treasury select committee last week: “Some of the decisions that may be taken if the stability objective is the only thing the FPC focuses on could lead to some very unfortunate unintended consequences, so we would like to see a secondary objective with a public interest element to it.”
Current proposals from the Treasury would see the FPC take responsibility for macroeconomic stability, which it would achieve by using a range of levers, such as the setting of loan-to-value ratios.
Financial Services Practitioner Panel chairman Iain Cornish said the potential impact those levers could have on the industry make accountability key.
He said: “The danger of a lack of accountability in the FPC is a judgement could be made that has a huge, possibly unforeseen consequence. The more scrutiny and transparency on decision-making, the better. It should be one of the bodies with the greatest level of scrutiny.”