The House of Lords will today debate amendments to the Government's far-reaching banking reforms after peers made an unprecedented request to fix what they called a "rushed and defective" piece of legislation.
It is understood that a group of cross-party peers asked the Treasury Select Committee for technical assistance to translate some of its proposals of changes to the Financial Services Bill into amendments, in an attempt to curb the power of the Bank of England.
The committee was concerned that the Bill, which abolishes the Financial Services Authority and splits its powers between a new Financial Conduct Authority and the Bank of England, was being rushed through without adequate scrutiny, despite the TSC's chairman, Andrew Tyrie, describing it as "the most important overhaul of financial regulation ever undertaken in this country".
Most of the amendments are aimed at stymying the reach of the BofE, which the Bill would make the most powerful unelected institution in Britain. It is believed a significant number of the changes had already been tabled at various stages of Commons scrutiny, but received little consideration owing to the relatively short time provided for debate. Mr Tyrie told i: "It was an unusual step for the committee to produce a report specifically designed to assist consideration in the Lords, but this crucial Bill warrants it. Despite being very complex, it has been rushed through, lacking clear lines of accountability to the respective roles of Parliament, the Government and the Bank.
"It was clear from the debate in the Lords at the Bill's second reading that many of those peers with most experience of the subject had similar concerns. There is still plenty of scope for improvement of what is at the moment a defective Bill."
The TSC hopes peers will make changes to the Bill before it comes into force next year. The amendments propose that the Bank's governance is not left to Threadneedle Street, and that directors undertake retrospective reviews of its performance.
The Labour peer Lord McFall wants the Treasury committee to have a role in hiring and firing the Bank's Governor, who is now appointed by the Treasury for up to two five-year terms.