Reuters: Regulatory News: British lawmakers call for stronger BoE oversight

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British lawmakers call for stronger BoE oversight Jun 7th 2012, 23:01 LONDON, June 8 | Thu Jun 7, 2012 7:01pm EDT LONDON, June 8 (Reuters) - British lawmakers stepped up calls for the government to strengthen oversight of the Bank of England, which next year will gain new powers to regulate the country's banks. Britain's upper house will debate new legislation on Monday that will make the central bank one of the world's most powerful financial regulators, under laws drawn up by the Conservative-led coalition government to help avoid a repeat of the credit crisis of 2007-08. In a report published on Friday, parliament's Treasury Committee called for amendments to the Financial Services Bill which would oblige the Court of the Bank of England - the central bank's supervisory body - to undertake retrospective reviews of the BoE's performance. The committee says the BoE Court should also conduct reviews into the central bank's "macroprudential" policy decisions - or the impact of its financial regulation on the wider economy. It also says the government should play a more active role in deciding how to govern the BoE. "The Bank must not be permitted to carry on with an outdated Court. We must ensure that the Court can operate, as far as possible, according to corporate governance best practice," Treasury Committee Chairman Andrew Tyrie said in a statement. The central bank's Court has already announced it will conduct reviews into the BoE's forecasting record, its provision of liquidity to banks during the financial crisis and its framework for providing liquidity to the banking system as a whole. However, central bankers have rejected calls for detailed public reviews of policy decisions, saying this could curtail free debate among policymakers. The Treasury Committee has called for stricter oversight in the past as the bank will now house the new Financial Policy Committee - in charge of macro-prudential regulation to prevent failures of the banking system as a whole - as well as a new bank regulator, the Prudential Regulatory Authority. A new supervisory board should have the power to examine the merits of the Bank's policy decisions, conduct internal reviews of its operations and publish the results within a year, the Treasury Committee said. The Treasury Committee had also tabled an amendment to the government's proposals to give it a veto over the appointment of the governor, but parliament ran out of time to debate the issue. "We hope that the House of Lords will remedy this defect," the report said. The government says the market-sensitive nature of the governor's appointment makes the role unsuitable for pre-appointment vetting, but has pledged to advertise the post and has said the appointment process will start later this year. Link this Share this Digg this Email Reprints

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