Charles Randell, who stood down as chair at the end of May after four years, wrote in The Times that the government “should leave the independent institutions which deliver financial regulation to do their job”.
Randell cautioned in May, just before he left, that the plans could create “a strong channel” for lobbyists from the financial services industry.
At issue is a government proposal for a “call back” power in the Financial Services and Markets Bill, to force regulators to reconsider rules if ministers deem them insufficiently “competitive”.
The move has faced resistance from the Bank of England and the FCA.
Randell, who was previously a top City lawyer, said the government was proposing that “ministers should be delegated power by parliament to step in when they do not like rules that a regulator is about to make, and instead impose rules of their own choosing”.
He added: “No details have been given, but it is unlikely that there would be much democratic accountability: the House of Commons has not rejected a single delegated measure in over 40 years”.
The Financial Services and Markets Bill is, Randall said, meant to ensure firms act in the interest of everyone in the UK, and it should “not now become a mechanism for vested interests to lobby ministers to circumvent the processes of public consultation, analysis and democratic accountability which regulators rightly have to follow”.
City regulators have publicly pushed back against the proposed “call back” power.
Speaking on 28 October at Mansion House, Sam Woods, chief executive of the Prudential Regulation Authority and Nikhil Rathi, CEO of the Financial Conduct Authority, cautioned against the measure.
Woods warned that the policy would represent “a significant shift away from a model of independent regulation”, adding that UK regulatory independence is “the basis for our international credibility”.
He concluded: “Some might think that such a power would boost competitiveness. My view is that through time it would do precisely the opposite, by undermining our international credibility and creating a system in which financial regulation blew much more with the political wind — weaker regulation under some governments, harsher regulation under others.”