Tyrie: FCA risks 'guilty until proven innocent' regulation

The new body set up to regulate advisers may lack proper accountability and needs closer scrutiny of its role, according the chair of the Treasury Select Committee (TSC) Andrew Tyrie.

In a letter to Peter Lilley MP, chair of the Draft Financial Services Bill Committee, Andrew Tyrie (pictured) said the current proposals could lead to a "guilty until proven innocent" system, with "little or no redress against an overbearing regulator".

The objectives of the Financial Conduct Authority (FCA), the body set up to takeover regulation of firms' behaviour from the Financial Services Authority (FSA), need closer scrutiny, he said.

Tyrie said it was clear the TSC's recommendation that the FCA have a primary duty of promoting competition had been cast aside.

"The FCA will have what may be argued as is a draconian new power to ban products... [with providers having] little or no redress against an overbearing regulator" he said.

Elsewhere Tyrie made a number of other recommendations for the Bill Committee to consider.

He called for relationship between the Bank of England and the Treasury to be redefined to avoid a repeat of the "underlap" that occurred during the collapse of Northern Rock.

"It has been put to us informally that the legislation does not achieve this," he added.

The Bank will have "unprecedented" power under the new rules, and this must be properly monitored, he said.