MP warns on new Bank chief powers

Updated: 
Andrew TyrieInvestigators could be sent to unearth information about the role of the Bank of England in the 2008 financial crisis if the Government refuses to fix "defective" legislation, a leading MP said.

Tory Andrew Tyrie, who chairs the Treasury Select Committee, said his members would not hesitate to send specialists into the Financial Services Authority (FSA) for a second time to get answers about the Bank's role.

Mr Tyrie said the action could be necessary unless the Government concedes to demands to toughen up the Financial Services Bill and reform scrutiny of the Bank of England.

The Chichester MP said his committee was demanding the Court of the Bank of England, effectively its board of directors, publish minutes in the same way as its Monetary Policy Committee - which sets business rates - and that it conduct its own review into the 2008 financial crisis to uncover any lessons which need to be learnt.

Speaking during the report stage of the Bill, Mr Tyrie said: "We would not hesitate to take new steps in order to get what we think should be in the public domain. In (the case of RBS), we took the unprecedented step of sending in specialist advisers into the FSA to conduct a full investigation. I think it should be made clear now we will not hesitate to do the same if this legislation remains defective with respect to the Bank of England.

"Sending in specialist advisers in that way was a somewhat cumbersome route to getting to the facts of the RBS issue but that is why it would be far preferable to improve this legislation so such action by the committee would not be necessary."

Mr Tyrie said as currently drafted, the Financial Services Bill was "defective in a number of respects and needs a good deal of attention and improvement".

He said all but one member of the Treasury Select Committee was of this view, leading the cross-party group to table an amendment creating a new clause to the Bill.

He said: "Under the Bill, the Governor of the Bank of England will be handed unprecedented new powers to shape the British economy - while continuing to set interest rates, the Bank will take over supervision of commercial banks and insurers, be responsible for tackling threats to financial stability and acquire the power to restrict lending on mortgages or order banks to increase their capital.

"One man or woman will wield all these powers, (making them) arguably as powerful as the Chancellor. As currently drafted the Bill seems to fly in the face of all ideas of modern government, let alone Parliamentary accountability."

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