“No institution, however powerful, should be unaccountable. It is particularly important that an institution as powerful as the Financial Conduct Authority should be subject to proper scrutiny,” said select committee chairman Andrew Tyrie MP.
The Government has proposed that by the end of 2012, the FCA would take over responsibility for regulating how firms conduct their business from the Financial Services Authority (FSA).
“Many argue that much of the FSA’s conduct of business regulation has been both ineffective and costly. It is vital to take the opportunity, with the creation of this new body, to do better,” Tyrie said.
Under the new structure, the Bank of England would have responsibility for macro-prudential regulation through the Financial Policy Committee (FPC) and micro-prudential responsibility through its subsidiary, the Prudential Regulation Authority (PRA).
The PRA would be responsible for regulating prudentially significant firms, such as deposit-taking banks and insurance companies.
In an earlier report, the committee said it believed competition and choice should play a more central role than currently envisaged in the draft legislation.
“One of the objectives of this inquiry is to scrutinise the remit and powers of the FCA to facilitate this,” said Tyrie.
“This is a golden opportunity to establish how, in future, the FCA can best be held to account by the consumers who pay for them, by industry practitioners and by Parliament,” he said.
A spokesperson for the FSA said the regulator intended to "engage with the committee fully" in its inquiry.
