The government has been criticized for not giving the UK’s financial watchdog more powers.
The Treasury Committee proposed in August that the Financial Conduct Authority (FCA) would be given formal power to recommend changes to the laws under its remit.
However, in its response, the government turned down the committee’s proposal. It stated that laws were ultimately up to the government and its ministers to decide.
The government’s added, “Decisions on which activities should be within the perimeter of regulation should ultimately be for ministers, with approval by parliament. The government therefore takes full responsibility for consulting on and proposing any changes to the perimeter to parliament. The government monitors the perimeter on an ongoing basis and acts when it sees consumer detriment.
“In order to ensure that this is done effectively, HMT already engages regularly with the financial regulators (including the FCA) at both official and ministerial level on whether the perimeter needs to be changed. These discussions have contributed to the government deciding to bring several financial services activities into FCA regulation, including consumer credit and peer-to-peer lending. The government does not therefore see the case for providing a formal power for the FCA to request changes to the perimeter.”
Catherine McKinnell, interim chair of the Treasury Committee, said, “There are signs in the government’s response to our report that it has started to engage with our recommendations on the remit and powers of the FCA. We look forward to the further work promised in this response.
“It was disappointing, however, that the government does not see the case for providing a formal power for the FCA to request changes to the perimeter. It would formalize the relationship that the Committee are told already exists between Ministers, officials and the FCA, thus providing greater transparency to the process.
“The Treasury Committee will continue to raise these issues in our evidence sessions with HM Treasury and the FCA.”
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