Clause 3 - Financial stability strategy and Financial Policy Committee

Part of Financial Services Bill – in a Public Bill Committee at 9:30 am on 23 February 2012.

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Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury 9:30, 23 February 2012

I agree that the ratio is 6:5 and that the six are Bank employees. I would not describe the Governor as an employee, necessarily, but the six are the Governor, the three deputies and two members appointed by the Governor of the Bank under proposed new clause 9B(1)(d), so the ratio is 6:5.

The hon. Gentleman should reflect for a moment on the FCA’s status. As we will discuss later, it is an independent body. The chief executive is not appointed by the Governor of the Bank of England. The chairman is not appointed by the Governor of the Bank of England. Its remit is around conduct issues, not prudential issues. Potential issues of equity with banks and insurers are under the remit of the Prudential Regulation Authority. There is independence, and suggesting that it is in some way a subsidiary of the Bank of England or part of the Bank group is fundamentally to misunderstand the nature of these reforms. I know from conversations with the CEO designate of the FCA that he has some clear views and that he will provide a clear input based on his experience to the discussions with the FPC, as we would expect. Therefore, it is wholly wrong to say that the CEO of the FCA should be counted as a Bank employee or within the Bank group. That just does not reflect the status of the FCA.

The 6:5 ratio that we have mirrors closely the ratio on the Monetary Policy Committee, where the ratio is five Bank people and four externals. I think that we would all agree that the MPC model has worked well and is much admired not just in the UK, but around the world. I see no reason to fix something that plainly is not broken.