On September 18, HM Treasury published a consultation paper on the powers to be made available to the Financial Policy Committee (FPC) to perform its macro-prudential regulatory role within the Bank of England under the regulatory regime being introduced under the Financial Services Bill currently before Parliament. The FPC will monitor the financial system and identify and address systemic risks. The FPC will have macro-prudential powers designed to allow the FPC to mitigate risks to financial stability. It will have powers of recommendation and powers of direction to help achieve its objectives.

In addition to making recommendations to the successor regulators of the Financial Service Authority, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), it is proposed that the FPC will also be empowered to make recommendations:

  •  To HM Treasury, for example relating to HM Treasury’s powers to extend or modify the perimeter of regulation.
  • Within the Bank of England, for example regarding the Bank’s regulation of systemically important financial infrastructure, such as payment and settlement systems.
  • To other persons, for example directly to the industry or other regulated bodies.

Recommendations to the regulators can be made on a “comply or explain” basis, so that the regulators would be required to comply with the recommendation or explain to the FPC and the public why they are not doing so.

The comment period runs until December 11.

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