Source · Select Committees · Treasury Committee
Recommendation 3
3
Paragraph: 36
We understand the need for Treasury Ministers to be well informed of the regulators’ policy...
Conclusion
We understand the need for Treasury Ministers to be well informed of the regulators’ policy intentions as a matter of routine. However, we have not been provided with compelling evidence to justify changing the law to allow Ministers the absolute right to see financial services regulators’ policy proposals before they are published for consultation as opposed to the current arrangements whereby significant interaction between Ministers and regulators happens informally as a matter of routine. By doing so, the perception of regulatory independence from government could be damaged. The independence of regulators to be free from political interference is one of the key aspects of UK financial services regulation, and it is, arguably, one of the reasons why the UK is a world-leading financial centre. Regulators must continue to be free to choose what they share with the Treasury in this respect.
Paragraph Reference:
36
Government Response
Acknowledged
HM Government
Acknowledged
The Committee raises concerns that the proposals put forward by the Government, allowing for earlier feedback from the Treasury during the policy formation process, will damage the perception of regulatory independence, even if they do not in practice. We think that independent regulation is important to maintaining robust, fair standards and, where this is appropriate, maintaining a consistent approach for firms, markets and consumers. As the Committee highlights, the importance of regulatory independence is also recognised internationally. It is important to strike an appropriate balance between ensuring we work effectively with Treasury to secure a cohesive approach, ensuring we are accountable and protecting regulatory independence. We already have very regular engagement with the Treasury through the legal gateway, and we are committed to ensuring that engagement is as effective as possible.