MPs on the committee, which sits in the House of Commons, fear that the Government is trying to rush through laws that will leave the financial system over-complicated and “outdated”. They have also been dismayed by the lack of scrutiny of what committee chairman Andrew Tyrie described as “the most important overhaul of financial regulation ever undertaken in this country”.
The Telegraph reports that by publishing the report, the committee hopes to help the House of Lords secure further changes to the Financial Services Bill before it comes into force next year – including improving the accountability of the Bank of England and ensuring the Chancellor can take control of regulation when taxpayers’ money may be at risk.
Under the Bill, the Financial Services Authority will be disbanded and its powers split between a new Financial Conduct Authority and the Bank, which will become the most powerful unelected institution in the UK – with tools potentially to intervene in the mortgage market to burst house price bubbles.
Mr Tyrie said: “No explanation has been given for the rush to produce the Bill and place it on the statute book by the end of the year. Better to take a little more time, and get it right, than rush it.” The report added: “The Government has responded to some recommendations made by the committee. But although the Bill is in better shape, it is still, in places, defective.”
The committee’s central concern is with Bank accountability. It wants Parliament put in charge of governance and for the Court of the Bank to operate independently and “according to corporate governance best practice”. “The Bank must not be permitted to carry on with an outdated Court,” Mr Tyrie said.
It also wants the Court to have a “statutory duty” to conduct retrospective reviews into “all areas of the Bank’s activity”.
The rate-setting and financial policy committees should have a majority of external members to stamp out “groupthink”, and “when public funds are at risk, the Chancellor should be given a general power to direct the Bank rather than the circumscribed powers in the Bill”.