The Treasury Select Committee has called for parliament to be given greater powers over new regulator, the Financial Conduct Authority (FCA).
The FCA's accountability must also be greater than current regulator, the Financial Services Authority (FSA), and the committee chaired by MP Andrew Tyrie has urged for the proposed reforms of the regulator to be revisited.
'The structure and objectives of the FCA will sit at the heart of this new regulatory system. Unless sufficient time is given to getting these reforms right, we could end up, once again, with a defective regulatory framework,' said Tyrie.
Tyrie and his committee want these four key areas of the new regulator's development to be reconsidered:
- FCA's objectives
- Finance Policy Committee's veto over the FCA
- Cost-benefits analysis
Particularly where accountability is concerned, Tyrie (pictured), said the FCA had been given 'huge powers, but fears these are not enough.
Tyrie said: 'It is not enough, as the Government has proposed, merely to match the weak, pre-existing accountability arrangements of the FSA; they must be substantially strengthened if the FCA is adequately to be accountable to parliament and, through parliament, to the public.
He added: 'It was only as a result of intensive Treasury Committee pressure that the FSA published an account of the UK’s biggest ever banking failure, at RBS. It should not be necessary for the Treasury Committee to engage in such protracted exchanges with the regulator in order to ensure transparency.'
Without a statutory base for parliamentary involvement, Tyrie said 'the temptation will always exist' for authorities to brush matters under the carpet.
'The Treasury Committee, on behalf of Parliament, must have the authority to require retrospective reviews of the FCA’s work,' Tyrie added.