MPs demand say on watchdogs as Andrew Bailey takes helm at FCA

Treasury Select Committee chairman warned that the 'perception' that financial regulators had become 'vulnerable to political pressure' was hindering their work

Andrew Bailey said the Chancellor ‘understands the flaws and merits of the sector better than anyone’ (PA)

MPs on the powerful Treasury Select Committee demanded a veto on the “hire and fire” of financial regulators following the surprise appointment of Andrew Bailey as the new head of the Financial Conduct Authority (FCA).

Andrew Tyrie, the committee’s chairman, wrote to George Osborne warning that the “perception” that financial regulators had become “vulnerable to political pressure” was hindering their work. The Treasury committee should be given veto over both the FCA and Prudential Regulatory Authority (PRA), he said, while seeking Mr Osborne’s assurance that he would not make decisions on either post without MPs’ approval.

Mr Tyrie said of Mr Bailey’s appointment: “As the leader of one half of the UK’s ‘twin peaks’ regulatory system, Mr Bailey has extensive experience of implementing the recommendations of the Vickers and Parliamentary Banking Standards Commissions. There is more work to do on both. Mr Bailey will now have the tough job of protecting consumers and markets, and bolstering competition, in an increasingly complex financial services sector.”

The appointment was clear evidence that the troubled City watchdog would ease up on curbing banking misbehaviour, the Labour MP John Mann said last night. “This appointment shows the Treasury and George Osborne have decided to downgrade consumer interests inside the FCA,” he claimed.

Mr Bailey, who also oversees the stability of the UK’s 1,700 banks, building societies and other financial services firms at the Prudential Regulation Authority (PRA), will take over at the FCA later this year. His appointment was a surprise because the Australian regulator Greg Medcraft had been widely expected to take over.

Mr Bailey, who is tipped as a successor to the Bank of Governor, Mark Carney, said he had had no plans to leave the PRA but was “honoured” to be asked to lead the FCA. He added: “After a lot of thought, I have decided to move and do all that I can to make the FCA effective and successful.”

The Chancellor said: “Anyone who has dealt with Andrew knows that he will be tough but fair, and understands the flaws and merits of the sector better than anyone.”

The appointment of Mr Bailey, who has worked at the Bank of England for 30 years, comes at a fraught time for the FCA. Earlier this month, it was forced to deny that the Government had ordered it to drop its review of banking culture. Mr Osborne is said to have ousted the former FCA boss, Martin Wheatley, after opposing his tough stance on financial enforcement.

Several other reviews are also under way, including assessments of the asset management industry and the financial advice market.