MPs in the influential Treasury committee are calling for the Financial Conduct Authority to separate out its enforcement division following a damning report in the collapse of HBOS.
In a report published yesterday, the committee said an “independent enforcement function” should sit between the FCA and PRA.
It says the current system – where one body supervises, applies and prosecutes the law – is “outdated and can be construed as unfair”.
It adds: “Separation would allow all three regulators – the FCA, PRA and an enforcement body – to enjoy much greater clarity over their objectives.
“There is a danger, especially with the FCA, that its multitude of objectives and initiatives are leading to regulatory overload. An FCA with fewer objectives, and a single separate body responsible for enforcement, would probably result in better accountability and better outcomes.
It adds: “The Treasury Committee expects the Treasury to appoint an independent reviewer to re-examine the case for a separate enforcement body.”
The recommendation is part of the committee’s review of several reports in to the failure of HBOS.
Only one former HBOS director, Peter Cummings, was fined in the aftermath of HBOS’ failure.
The FCA was criticised in December 2015 after admitting it would be unable to fine any former HBOS executives because the bank’s failure fell outside the six-year statute of limitation on fines.