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The Treasury Select Committee has launched a new sub-committee to scrutinise post-Brexit regulatory proposals for financial services.
In a new report that outlines its approach, the committee, a bipartisan group of parliamentarians, has argued that new forms of scrutiny are required following the UK’s exit from the EU. This is especially important given the number of regulatory initiatives are likely to grow as regulators assume additional responsibilities.
The Sub-Committee on Financial Services Regulations will take the lead on scrutiny of financial regulatory proposals and will have the power to “send for persons, papers and records” and agree on reports.
Like the Treasury Select Committee, it will be chaired by Mel Stride, and has confirmed that for now it will consist of current committee members.
“Following the UK’s exit from the EU, our regulators have assumed significant new responsibilities,” said Stride. “Those will require scrutiny, and parliament has an opportunity to put in place a process which is less bureaucratic and significantly more nimble than was previously the case in the European Union.”
The Treasury Select Committee, he suggested, is well placed to conduct this scrutiny. “We often consider new regulatory proposals and, given our responsibility to scrutinise the Treasury and its associated regulators, we can take a holistic view of regulatory change.”
“Our approach will be targeted and flexible, with the new sub-committee devoted to the scrutiny of financial regulations and underpinned by a new and well-resourced unit of experts and specialists,” he said.
The sub-committee will focus on assessing regulatory proposals which contain texts that would have legal effects.
It also says it will normally intervene at the consultation paper stage, when proposals have been presented in draft texts but when there is also clear scope for input from members of parliament.
When scrutinising financial legislation, the sub-committee will consider whether policies are justified and desirable, the balance between service providers, consumers and other stakeholders, and whether benefits outweigh any drawbacks.
MPs will also look at whether a regulator is acting within its delegated power and that the draft proposals are a necessary standard that needs to be set.
The sub-committee has confirmed its work will commence with scrutiny of the Prudential Regulation Authority’s proposals for a "Strong and Simple Framework".
If enacted, this would amount to a significant change in prudential policy applying to banks and building societies, including a simplification of the regime for smaller non-systemic financial institutions.
