Monday, 28 November, 2022

UK seeks power to overrule finance regulators

Britain wants to grant ministers the power to overrule financial regulators including the Bank of England when they deem it in the public interest, the government confirmed Monday.

Prime Minister Rishi Sunak, who took office a week ago, had proposed the "intervention power" when he was finance minister in Boris Johnson's administration.

The UK government in July introduced legislation aimed at boosting the post-Brexit competitiveness of the powerful financial services industry.

That bill will now be amended by Sunak's finance minister Jeremy Hunt.

"We have confirmed our intention to bring forward an amendment to the Financial Services Bill, to include an 'Intervention Power' that will enable the Treasury to direct a regulator to make, amend or revoke rules where there are matters of significant public interest," a Treasury spokesperson said.

"The government has always been clear that this is a safety valve that must be balanced with clear accountability, appropriate democratic input and transparent oversight."

The bill also repeals hundreds of pieces of retained EU law after the country left the bloc in full in 2021.

Critics denounced it as reckless deregulation, particularly after the 2008 global financial crisis.

Sector professionals have applauded it, however, for bringing standards up to date.

In its current state, the bill already puts the industry's regulators -- the Financial Conduct Authority (FCA) and the Bank of England -- under increased scrutiny by parliament and the finance ministry.

Sam Woods, head of the BoE's Prudential Regulation Authority which oversees commercial banks, warned last week that overruling regulatory decisions would "undermine" Britain's "financial credibility".

FCA head Nikhil Rathi added that it was "vital" that the watchdog's independence was "not undermined by any proposed call-in power".

Nevertheless, vocal Brexit backer Sunak has promised a "big bang" in the UK finance sector after the deregulation of the 1980s.

Sunak took power after the implosion of the government of Johnson's successor Liz Truss, who resigned after her debt-fuelled tax-slashing budget spiked government bond yields and tanked the pound.