This note summarises the debate in the House of Lords on the Bank of England and Financial Services Bill which ended in January 2016..
The Bill amends arrangements for the governance and accountability of the Bank. It includes changes to the Bank’s court of directors and allows the Comptroller and Auditor General (C&AG) to undertake value for money studies, subject to some limitations. The status of the Prudential Regulation Authority is altered and the Bill extends the scope of, and makes changes to, the Senior Managers and Certification Scheme. The Bill allows the extension of the Government’s Pension Wise scheme and makes changes to the rules governing the issuing of banknotes in Scotland and Northern Ireland.
During its passage through the House of Lords, the provisions relating to the governance of the Bank and its scrutiny by the C&AG received considerable attention. A number of speakers raised concerns about what they saw as a reduction in the role of the Bank’s non-executive directors and the ability of the Bank to prevent the C&AG from examining certain areas of the Bank’s work. In response to these concerns, the Government brought forward amendments at Report stage to strengthen the role of the non-executive directors and clarify the C&AG’s remit.
Rather more changes were made to the provisions on the regulatory aspects of the Bill.
A number of new clauses were introduced by the Government, including one to give the Treasury the power to make recommendations to the Financial Conduct Authority (FCA) about aspects of government economic policy, which the FCA should have regard to in its duties. The second concerned rules about compulsory checking of advice in the forthcoming secondary annuity market.