Threat to UK financial services watchdogs |  Regulators

Threat to UK financial services watchdogs | Regulators

The government has flip-flopped on plans to introduce sweeping powers that would allow ministers to override regulators, including the Bank of England, after multiple warnings that such a move would damage the Kingdom’s global reputation -United.

The Treasury confirmed on Wednesday evening that it “would not proceed with the power of intervention at this time”, noting that the government was “committed” to the independence of the city’s watchdogs, including the Financial Conduct Authority.

The powers would have given the government the ability to make, change or revoke rules on matters that ministers deemed to be of “important public interest”.

Opposition MPs and senior officials, including from the Bank of England, have warned the move would threaten the independence and international reputation of the UK and its regulators.

Concern grew sharper after the government’s mini-budget, which rattled international investor confidence and sent the pound and UK government bonds to record highs.

“After further consultation, we believe that the existing provisions in the bill are currently sufficient and will already enable us to seize the opportunities of Brexit by adapting financial services regulation to UK markets to strengthen our competitiveness,” the minister said. of the city, Andrew Griffith. , said in a statement on Wednesday.

He added: “We have always been concerned with finding the right balance between increased accountability of regulators, clear accountability, appropriate democratic input and transparent oversight. We remain committed to the operational independence of financial services regulators.

The intervention powers were to be introduced through an amendment to the sweeping Financial Services and Markets Bill, which broadly aims to overhaul the city’s regulations originally inherited from the EU.

Following the resignation of Liz Truss as Prime Minister, the Treasury announced last month that it was delaying the amendment to ensure that the new government led by Rishi Sunak could “carefully consider the details”.

The Treasury’s latest announcement suggests the government has bowed to domestic and international pressure over the amendment.

Sunak was the first to propose the powers during his tenure as chancellor. The plans were then taken over by Truss and his chancellor, Kwasi Kwarteng, sparking further tension between the government and Bank of England officials, who were already accused of failing to get Britain’s inflation under control.

Commenting on the U-turn, the city’s shadow minister, Tulip Siddiq, said: ‘The government should never have threatened the independence of financial services regulators in the first place. The Tories have done incalculable damage to the UK’s international reputation not only in the last 12 weeks, but also in the last 12 years. What we need now is restoring financial credibility and a serious plan for growth that puts workers first.

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