Published June 09, 2013
LONDON – British lawmakers said they would conduct an inquiry into the independence of the Bank of England's new financial risk watchdog, following questions over its relationship with government and its appointment process.
Doubts had been raised over the independence of the Financial Policy Committee, set up following the financial crisis in 2011 to pinpoint economic risks, parliament's Treasury Committee said in a statement on Monday.
The committee cited a letter from finance minister George Osborne that set out the FPC's remit after it gained formal powers on April 1.
Osborne had written to outgoing central bank governor Mervyn King, saying the FPC should consider short-term growth as well as longer-term stability.
The committee also mentioned the replacement of hawkish FPC members with new ones seen by critics as more friendly to banks and businesses. Confirmation hearings for three new appointees took place last week.
"The FPC is still finding its feet. It is crucial that its independence is safeguarded from the start," said Treasury Committee Chairman Andrew Tyrie.
"It is therefore particularly important that the appointment process and early exchanges between the Treasury and the FPC don't give the appearance that it has been compromised."
The committee said it would also look at the rules relating to the appointment and conduct of members of BoE bodies, including the FPC, the older Monetary Policy Committee, and the BoE Court.
Last week, the Treasury Committee quizzed the new external members of the FPC - Clara Furse, Richard Sharp and Martin Taylor - about the right trade-off between regulation and growth at their confirmation hearings.
It later expressed "serious concerns" about the appointment of Furse, who sat on the board of Belgian bank Fortis during its botched takeover of a stake in ABN AMRO in 2007.
(Reporting by Rosalba O'Brien; Editing by John Stonestreet)