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Treasury to hold FCA to account

The Financial Conduct Authority will have to report to the Treasury to justify its decisions in the event of a regulatory failure.

The accountability measure was laid out in the FCA’s app-roach to regulation document this week, which includes a duty for the Treasury to publish the report and lay it before Parliament unless there are “good reasons” not to or it could prejudice ongoing investigations.

It says: “The report would address the FCA’s actions and decision-making and consider what lessons can be learned by firms and regulators.

It is only where a significant failure is due to the FCA’s actions that a report will be required.”

The FCA will have to submit an annual report to Parliament evaluating how it has met its statutory objectives which include promoting efficiency and choice in markets and boosting competition. It will be subject to independent investigations on how efficiently it operates and be overseen by a board with members appointed by the Treasury and the Department for Business, Innovation and Skills.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 30th June 2011 at 7:55 pm

    Given that the FSA is supposed to be answerable to the TSC but that in practice the TSC has no actual powers, what powers of sanction will the Treasury have over the FCA? Will Hector Sants or his successor be allowed to get away with wriggling out of naming names when something goes wrong or when something blows up due to lack of action on the part of the FCA? Will any restrictions be imposed on how much the FCA is permitted to pay out in bonuses of highly questionable merit? No mention here of the NAO, I note.

    It’s interesting also to see mention of the Dept. for Business, Innovation & Skills, as it was this department’s predecessor, the Dept. for BERR that produced the Statutory Code of Practice for Regulators which, as we all know, the FSA not only ignores but flagrantly flouts (despite claiming that it doesn’t). Maybe Andrew Tyrie did actually take note of the hard copy of the Code that I sent him a couple of months ago.

    Overriding all this, though, is the fact that the goverment has already announced formally that the FCA will be accountable only to its own board which, of course, means accountable to absolutely nobody. Might it be too much to hope that the FCA will, in fact, be held accountable? We live in hope, if not expectation.

  2. Julian Stevens 4th July 2011 at 9:51 pm

    And surely this will give rise to no small measure of internecine conflict, given that the Treasury is also in large measure responsible for setting the regulatory agenda? What is needed is an Independent Regulatory Oversight Committee entirely separate from the Treasury.

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