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Parliament is launching a new committee to scrutinise Britain’s financial services regulators, following growing concerns about accountability as the watchdogs accrue fresh post-Brexit powers.
Former cabinet ministers Lord Michael Forsyth, Lord Jonathan Hill and Lord Peter Lilley, plus former corporate executive Baroness Sheila Noakes are among Tory peers set to sit on the cross-party House of Lords body.
Forsyth said there had been “unanimity” in the Lords that action was needed to improve the accountability of the regulators to parliament, adding that the upper chamber boasted a wealth of members with relevant “experience and expertise”.
Regulators the Financial Conduct Authority and Prudential Regulation Authority are already subject to frequent questioning by the House of Commons Treasury select committee, which launched a dedicated subcommittee on financial regulation in 2022 so that it could hold regulators more accountable for the extra powers Brexit heaped on them.
As well as assuming responsibility for setting Britain’s rules after Brexit, rather than simply adopting the EU rule book, the UK’s regulators were given a new secondary mandate to promote “medium to long term growth and international competitiveness” in the government’s omnibus financial services legislation last year.
The 2023 Financial Services and Markets Act also included measures on making the FCA and PRA more accountable, including mandating both agencies to publish reports on how they are meeting the new objectives over the coming years.
The government has been consulting industry and other interested parties on proposals for formal metrics that should be used to measure the success of the PRA and FCA and in December published an extensive list of performance measures that both agencies would be required to publish.
The new committee will complement the work of the Treasury select committee, and will avoid duplication by taking a more thematic approach to the regulators’ involvement with the City.
The membership of the new body, to be chaired by Forsyth, is expected to be approved by peers later this month. Labour peers Lord Jonathan Kestenbaum, a financial services executive, businessman Lord Clive Hollick and economist Lord Jonathan Eatwell, plus Liberal Democrat Baroness Sharon Bowles, a former MEP, will be members.
Cross-benchers Lord Anthony Grabiner, a leading KC, and businessman and former BBC governor Lord Robert Smith are also among the line up.
Bim Afolami, economic secretary to the Treasury, welcomed its formation. “I have long been an advocate of more parliamentary accountability of the regulators,” he said, adding that greater co-ordination between the government, parliament and the watchdogs would foster a “more competitive, growth-orientated, less risk-averse environment” in the UK.
The FCA said: ‘It is vital we are accountable to parliament for the role it has given us. We look forward to engaging with the committee.’
The PRA declined to comment.
