Clause 73 - Power of Treasury to require FCA or PRA to undertake investigation

Financial Services Bill – in a Public Bill Committee at 11:15 pm on 20th March 2012.

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Question proposed, That the clause stand part of the Bill.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I have just a few questions for the Minister about the threshold triggers whereby the Treasury can require the FCA or the PRA to undertake an investigation. Will he explain what they are and what level of failure in relation to “relevant events” would need to have occurred for the Treasury to require such an investigation? Does not that imply that an investigation should be conducted by an independent body, rather than the regulators? Why is that not mentioned in this provision? Will the Minister also explain how concerns will be addressed in relation to the disclosure of confidential information that might be included in reports to the Treasury? I would be grateful if he could help me on that.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The power in clause 73 supplements the operation of clauses 69 and 70—they require the PRA and FCA to launch an investigation into potential regulatory failure—with a backstop power for the Treasury to require the regulator to carry out an investigation in the public interest. Of course, whether that is in the public interest or not cannot be defined in legislation, so the clause is silent on that matter. It would be a matter of judgment for the Government of the day. We are seeking to ensure that where there are borderline cases, in which the regulators are not clear that the trigger for conducting an investigation has been met, action can nevertheless be taken if the Treasury uses the powers under clause 73. There may be areas where it is not quite clear whether there has to be an inquiry, and we are giving the Treasury the power, in those grey areas, to say there should be an inquiry.

In some circumstances, it may be appropriate for confidential information to be disclosed, if that is necessary to give a proper account of what has happened. The new transparency power will enhance the public accountability of the PRA and FCA by imposing on them a duty to investigate and to report to the Treasury on certain matters, including possible regulatory failure.  Whether confidential information should be released will be determined on the facts of each individual case. Due process will be applied, and that will include consultation with the persons affected, where appropriate.

Question put and agreed to.

Clause 73 accordingly ordered to stand part of the Bill.