LONDON (Reuters) – Financial regulators warned Britain’s government on Monday against “political rulemaking” which would damage the City’s global competitiveness and reputation for independent oversight of markets.
The finance ministry has said it wants to give itself the power under a draft financial services law now before parliament to force regulators to scrap or amend a rule if it is in the public interest to do so.
Financial services minister Andrew Griffith has yet to set out the wording of this new power, but last week signalled a delay in putting it forward.
Financial Conduct Authority CEO Nikhil Rathi told parliament’s Treasury Select Committee that in areas like enforcement, it would be a “very big departure for there to be political rulemaking”.
The FCA’s acting chair Richard Lloyd told lawmakers that even if the ministry used the power sparingly, it would be seen as undermining the watchdog’s independence and hit the international competitiveness of UK financial markets.
“The perception of erosion of our independence will happen very rapidly,” Lloyd told the committee.
The Bank of England has also spoken out against the proposed veto power.
(Reporting by Huw Jones; Editing by Hugh Lawson)
