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26 February 2016

The Treasury Select Committee (TSC) of MPs has refused to back down in its call for a veto on the appointment or dismissal of Financial Conduct Authority (FCA) chief executives by tabling an amendment to forthcoming legislation.

Nine members of the TSC have called for a new clause to be inserted into the forthcoming Bank of England and Financial Services Bill that the Treasury shall not appoint or remove a chief executive without the consent of MPs. If successful the amendment would give MPs the power to block nominations by the Treasury.

The TSC has also called for the power of pre-appointment veto over incoming Bank of England governors.

The TSC previously called for a veto on regulatory appointments when it published a report into the FCA in 2012. The government rejected the suggestion citing the market sensitivity around the appointment of the regulator’s chief.

However the TSC argues the move would improve the appearance of independence at the FCA after recent accusations that the Treasury held undue influence over the regulator.

The TSC reiterated its call for veto power in January, but has now tabled the motion to put further pressure on the government.

‘Public appointments to Quangos [quasi-autonomous non-governmental organisations] need more rigorous scrutiny,’ TSC chair Andrew Tyrie (pictured) said. ‘They have needed it for years. More of the most powerful appointments – of the chief executive of the FCA and the governor of the Bank of England – should be subject to full pre-appointment scrutiny. The government continues to disagree, appealing to the “market sensitivity” of these appointments. That is not an adequate explanation.’

‘The time has come to entrench the independence of the post of chief executive of the FCA. On behalf of the TSC, I have tabled an amendment to the Bank of England and Financial Services Bill to give this effect.

‘The chief executive of the FCA should be able to operate with the confidence that he or she cannot be dismissed without parliament’s – the Treasury Committee’s – approval,’ Tyrie added. ‘The public, too, need to have confidence that the overnment is not interfering with independent supervisors and regulators.’

The Bank of England and Financial Services Bill is currently under scrutiny from parliamentary sub-committees. The TSC members have tabled their amendment for debate when the bill reports to the full House of Commons. No date has yet been set for this debate.

By David Petty

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