The UK government has reiterated its plans to push through an amendment which will include an ‘intervention power’ to overrule the UK’s financial regulators, such as the Bank of England.
Despite of concerns among legislators that the proposal could harm the City of London, new Prime Minister Rishi Sunak, who first proposed the measure while chancellor, has told the Treasury that he wants to move forward.
The Treasury said, “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.”
The government plans to introduce the amendment during the committee stage of its passage through parliament and the chancellor would make the final decision over the specifics of the intervention power.
Jeremy Hunt, the current chancellor, and Andrew Griffith, who was reappointed as a City minister last week, are now in charge of carrying out the policy.
However, Sam Woods, chief executive of the Prudential Regulation Authority and Nikhil Rathi, CEO of the Financial Conduct Authority, have cautioned against the measure.
At a recent gathering of City executives, Woods said “A power which allowed ministers to override regulatory decisions just because they took a different view of the issues involved would represent a significant shift away from a model of independent regulation,” adding that he would be “very cautious” of any such measure.
He added, “Some might think that such a power would boost competitiveness. My view is that through time it would do precisely the opposite, by undermining our international credibility and creating a system in which financial regulation blew much more with the political wind — weaker regulation under some governments, harsher regulation under others.”
Sunak had previously set out his approach in a “Brexit manifesto” or “Big Bang 2.0”, which aims to enhance the post-Brexit competitiveness of the country’s financial services industry.
