“Public appointments to quangos need more rigorous scrutiny. They have needed it for years. More of the most powerful appointments – of the Chief Executive of the FCA and the Governor of the Bank of England – should be subject to full pre appointment scrutiny. The Government continues to disagree, appealing to the ‘market sensitivity’ of these appointments. That is not an adequate explanation.

The time has come to entrench the independence of the post of Chief Executive of the FCA. On behalf of the Treasury Committee, I have tabled an amendment to the Bank of England and Financial Services Bill to give this effect. The Chief Executive of the FCA should be able to operate with the confidence that he or she cannot be dismissed without Parliament’s – the Treasury Committee’s – approval. The public, too, need to have confidence that the Government is not interfering with independent supervisors and regulators.

The OBR provides an appropriate precedent. In 2010 the Chancellor agreed that the appointment and dismissal of the head of the OBR should be subject to Select Committee approval. He also agreed that this would bolster the independence – and the perception of independence – of Robert Chote, to the benefit of both the Chancellor and the country. And so it has proved. The Chancellor has frequently alluded to the Chairman of the OBR’s independence from the Treasury to reinforce the credibility of the forecast. A similar arrangement should also be put in place to entrench the FCA’s independence.

The OTS’ independence certainly needs to be bolstered. The OTS cannot achieve much if it appears – whether fairly or not – to be a creature of the Treasury. It is crucial that the scope and limitations of its independence are fully understood by HM Treasury, the OTS, Parliament and the public.”