Members of parliament want to break up the Financial Conduct Authority – separating the FCA’s enforcement division into an independent body – following “severe flaws” around the failure of HBOS.
Today’s Treasury Select Committee report draws together the findings of the FCA and the PRA’s review into the failure of HBOS, Andrew Green QC’s review of the enforcement decisions taken by the regulator, the independent review of these two reports by the Treasury Committee’s specialist advisers – Iain Cornish and Stuart Bernau – and oral evidence taken from the publishers of all three reports by the Treasury Committee in December 2015.
Andrew Tyrie MP, Chairman of the Treasury Select Committee, said: “The regulators failed, both before and after the HBOS crisis. Seven years after the bank’s collapse, we now know just how badly. And not because the regulators showed a spirit to learn the lessons of the past. It took persistent pressure from the Treasury Committee to ensure these failures weren’t swept under the carpet.
“So the HBOS experience calls for the FCA and the PRA to exhibit greater vigilance and energy if they are to win public confidence. This has on occasion been lacking.
“A lot is at stake. The plain fact is that the FSA did not succeed in protecting consumers from spectacular regulatory failures. The creation of the FCA and the PRA has been an opportunity to build something much better. This is still work in progress, particularly at the FCA.”
And he added: “The case for placing the FCA’s enforcement function in a separate body – proposed by the PCBS in 2013 and later rejected by the Treasury – has been strengthened by the findings of Andrew Green’s report. A separate body would bolster the perception of the enforcement function’s independence, and provide the regulators with greater clarity over their objectives. The case for separation merits serious re-examination. The Treasury should appoint an independent person to undertake a review.”