A new independent body could track progress against certain metrics, with elected officials also given more scope to probe their actions, according to suggested changes to the draft legislation that will form the blueprint for the UK’s post-Brexit financial rules. This would provide greater accountability and transparency around the use of public funds.
The proposals being considered by the upper house of Britain's parliament could reignite the debate about the independence of financial regulators. Last year, there were a series of clashes between the government and the financial regulators, which led to the government dropping its plans to give ministers the power to intervene in the actions of the Prudential Regulation Authority and Financial Conduct Authority.
Several members of the House of Lords are looking at ways to increase oversight based on objective criteria. With Brexit, the regulators will gain new powers and there will be new processes for Britain’s parliament to oversee them, the lawmakers believe.
George Bridges, a Conservative peer, has proposed the creation of a new watchdog: the Office for Financial Regulatory Accountability. Bridges believes that regulation needs to be effective, proportional, and consistent. He wants there to be accountability in order to ensure that these standards are met.
The new body could be similar to the Office for Budget Responsibility, which was created in 2010 to provide independent analysis of the UK’s public finances.
Jonathan Hill, a fellow Conservative lawmaker who carried out a review for the government on ways to modernize the UK’s listings regime, supports the creation of an independent body to hold regulators to account. He believes that this would help to ensure that the UK’s listing regime is modern and effective.
Hill said that he does not see the proposed changes as a challenge to the independence of regulators, but as something objective that would build confidence in the overall system.
Sharon Bowles, who sits in the House of Lords and was previously a member of the European Parliament, is calling for extra powers for Britain's parliament due to the complexity of financial services and their importance for Britain's economy.
The House of Lords will debate possible changes to the financial services and markets bill on Wednesday. If the changes attract enough parliamentary support, they could be added to the bill.
The new legislation is set to come into effect in the Spring, covering a wide range of topics including crypto rules and access to cash for consumers.
One of the key areas for the UK government after Brexit is setting the direction for the country's regulatory regime. Last year, there was significant debate about how much freedom regulators should have to determine policy and whether they should be required to consider the UK's international competitiveness.
The Treasury Department has announced that it will require the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) to consider competitiveness as a secondary objective after safety and soundness. This change will help ensure that the UK's financial services sector remains strong and vibrant.
The scrapped call-in power was misconceived, as it awarded extra powers in a narrow way to the government. Instead, there could be wider parliamentary scrutiny and the introduction of objective standards.
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