MPs given role in appointment of Financial Conduct Authority boss
MPs will be given the final say on who is appointed as the boss of the Financial Conduct Authority (FCA), a Treasury minister has announced.
The Treasury Select Committee wanted to be given the power to veto future appointments to the City watchdog.
And George Osborne has now agreed with the committee's chairman Andrew Tyrie a way forward which will allow MPs to have their say on who is put in charge.
Harriett Baldwin, Economic Secretary to the Treasury, told the House that Mr Osborne had written to Mr Tyrie today setting out the arrangements.
Quoting from the letter she said: "During the passage of the Bank of England and Financial Services Bill we have considered the role of the Treasury Select Committee in scrutinising the appointment of the chief executive of the Financial Conduct Authority.
"This scrutiny is important and welcome. I will therefore ensure that appointments to the chief executive of the FCA are made in such a way to ensure that the Treasury Select Committee is able to hold a hearing after the appointment is announced but before it is formalised.
"Should the Treasury Select Committee recommend - this is more exciting news - in its report that the appointment be put as a motion to the whole House the Government will make time for this motion and respect the decision of the House."
Meanwhile, the Chancellor also confirms in the letter that he will "seek in a future Bill to make a change to the legislation governing appointments to the FCA CEO to make the appointee subject to a fixed renewable five year term".
Shadow chancellor John McDonnell suggested that legislation be brought forward "sooner rather than later".
The Deputy Governor of the Bank of England Andrew Bailey was appointed to the role of chief executive of the FCA back in January of this year.
Mr Osborne was widely-reported to have ousted former boss Martin Wheatley, prompting concerns about possible political influence at the regulator.
The new arrangements on appointments will not apply to Mr Bailey but will to his successor.
Labour's Helen Goodman, a member of the Treasury Select Committee, said giving MPs a veto on the issue is "extremely welcome and a significant step forward".
However, she questioned why the arrangements are contained in a letter and not in the current legislation as MPs debated the report stage of the Bank of England and Financial Services Bill.
Meanwhile, shadow Treasury minister Richard Burgon welcomed the "exciting news" that the Government "accepts the broad thrust of the proposals put forward" by Mr Tyrie.
Meanwhile, Ms Baldwin rejected moves to try and change the name of the Bank of England to better reflect the fact that it operates across the UK.
An amendment put forward by the SNP called for the bank to be officially renamed the Bank of England, Scotland, Wales and Northern Ireland.
Another put forward by Plaid Cymru's Jonathan Edwards (Carmarthen East and Dinefwr) and Mark Durkan (Foyle) of the Social Democratic and Labour Party called for it to be changed to the Sterling Central Bank.
Mr Edwards used the example of the England and Wales Cricket Board which he said is usually only referred to as relating to England to suggest that the name of the bank could be changed along the lines suggested by the SNP with it still being known as the Bank of England.
Ms Baldwin accepted that the name is an "historical anomaly" but rejected the calls to change it "because we think that it's well-established over 300 years that it is called the Bank of England".
Tory chairman of the Treasury Committee Andrew Tyrie described it as a "very good" Bill in many respects, adding: "It implements a good number of the wider objectives of Bank of England scrutiny and accountability which the Treasury Committee have been pushing for, for many years."
The FCA he said needed a "strong and demonstrably independent" chief executive accountable to Parliament after enduring a difficult birth.
He said: "With what will amount to a requirement for Parliamentary approval of future appointments or dismissal of the FCA chief executive, the incumbent will now be in a stronger position to resist pressure from ministers and officials and his authority will be bolstered quite a bit."
Mr Tyrie spoke about the "increasing number" of quango appointments adding they should feel accountable to Parliament.
He said: "What we've had over decades really with successive Governments, is Governments offloading responsibilities to quangos leaving the public with the sense that nobody is ultimately democratically accountable for anything."
He added: "This agreement with the Chancellor is a sizeable step in the right direction... I'm very happy with this exchange of letters, grateful to ministers for having agreed it and I won't be taking (new clause one) to a division tonight."
SNP Treasury Committee member George Kerevan (East Lothian) argued the Bank of England had acquired in the last 20 years an "extraordinary range" of new powers, and fundamental policy levers for running the whole economy had been transferred from the Commons and executive to the Bank of England itself.
He said: "We have gradually allowed the bank to take over from this House far too much of the operational policy directing the economy."
Mr Burgon said Labour would support an SNP amendment to change the name of the Bank of England to better reflect the fact that it operates across the UK.
Charles Walker, the Tory MP for Broxbourne, proposed an amendment to the Bill which would ensure that banks act "proportionately" when they apply European rules on money laundering to so-called politically exposed persons (PEP).
He said that politicians, members of the armed forces, judges, civil servants and even journalists who are deemed to be PEPs either could be or have been targeted unfairly by banks seeking to "de-risk".
He wants the FCA to be required to supply clear guidance to banks defining exactly what is proportionate and for the FCA to adjudicate on cases and possibly even fine banks which have unfairly treated people they have deemed to be politically exposed by restricting their access to banking services.
He said: "It's needed because it's clear that, interpreting the fourth money laundering directive, banks are making no distinction when determining who is a politically exposed person between those PEPs drawn from the corruption hotbeds of Nigeria, Russia and parts of the sub-continent, and those drawn from developed democracies such as our own, with high levels of scrutiny and accountability."
He said he was aware of a member of the press lobby who had experienced problems with an ISA and was questioned by his bank.
"When he asked the person at the end of the phone from the bank 'why are you conducting yourself in this way?' the response was 'because we understand that you are an associate of the Prime Minister'," Mr Walker said.
The Government has indicated it is willing to accept Mr Walker's proposals.
Mr Burgon spoke about Labour's proposals for combating abusive tax avoidance in the wake of the Panama Papers leak, arguing it should be established as a new regulatory principle for the FCA.
Under Labour's plans, he added, the FCA would be required to undertake in consultation with the Treasury an annual review for presentation to the Treasury into abusive tax avoidance.
This would, he said, include "measures to ascertain and record beneficial ownership of trusts using facilities provided by banks with UK holding companies or entities regulated by the Bank of England or the FCA, control of shareholders and ownership of shares, and investment arrangements in an overseas territory outside the UK involving UK financial institutions".
Referring to Mr Walker's amendment, Ms Baldwin said: "I would like to reassure the House that we are very much on the side of colleagues in this regard. I therefore welcome this amendment and the strong message it sends to banks as they implement these rules.
"The clause itself also addresses guidance and I fully agree that guidance will help the banks to take an effective, proportionate and commensurate approach to politically exposed persons.
"The Government intends to implement new money laundering regulations by June next year at the latest and this amendment will come into force at that time and we will be consulting on the new regulations this year."
A vote on Labour's proposals regarding combating abusive tax avoidance arrangements was defeated by 245 votes to 299, majority 54.
A further vote on Labour's amendment eight was defeated by 246 votes to 300, majority 54.
Ms Baldwin rejected Mr Burgon's proposals for the FCA to combat abusive tax avoidance and set out measures already taken by the Government in the wake of the Panama Papers, including a beneficial ownership register in the UK.
"As the UK tax authority is HMRC rather than the FCA or PRA, they are the ones who are responsible for ensuring that businesses and individuals pay the taxes they owe," the minister said.
She added: "While I appreciate the spirit with which this amendment has been tabled, I do not believe it will be appropriate to change the role of the FCA or the PRA (Prudential Regulation Authority)."