Members of the House of Lords will today debate major amendments to the Government's far-reaching banking reforms after peers made an unprecedented request to fix what it 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 a bid to curb the power of the Bank of England. That's after the TSC first took the highly unusual move of publishing a special report into the legislation last month.
The Committee raised concerns 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 Parliament without adequate scrutiny. That's 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 suggested amendments are aimed at stymying the reach of the Bank of England, 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 due to the relatively short time provided for debate.
Mr Tyrie told The Independent: "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. Many people would not start from this point, but nonetheless there is still plenty of scope for improvement of what is at the moment a defective Bill."
The Committee hopes that the Lords will make changes to the Financial Services Bill before it comes into force next year. The amendments – tabled by peers including the Treasury minister Lord Sassoon, Baroness Wheatcroft, a former editor of the Wall Street Journal Europe, and the economist Lord Peston, propose that the Bank's governance not be left to Threadneedle Street.
They recommend that the Bank of England's court of directors undertake retrospective reviews of the Bank's performance, and that, when taxpayer money is at risk, the Chancellor should be given the power to take over control for regulation.
Another amendment, from the Labour peer Lord McFall, proposes that the Treasury Committee should have a role in the appointment and dismissal of the Bank's Governor. Currently, the post is appointed by the Treasury for up to two five-year terms.
"No explanation has been given for the rush to produce the Bill and place it on the Statute Book by the end of the year," Mr Tyrie said. "Better to take a little more time, and get it right."
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