Govt resists Arch cru probe

The government has once again turned down a request from an MP for an independent investigation into the Arch cru collapse.

In a written question, Gregory Campbell MP urged the Treasury to give consideration to using its section 14 powers under the Financial Services Markets Act 2000, which allow it to arrange independent inquiries.

However, financial secretary Mark Hoban said the government was "yet to be persuaded" that an inquiry is appropriate, the same phrasing David Cameron used last month.

He added: "The powers to set up such an independent inquiry are available when it appears that regulatory failure may have significantly damaged the interests of consumers.

"It is not the role of the Financial Services Authority (FSA) to ensure that no firm fails, or to approve fund investment strategies or accounts. Rather its role is to regulate, in a proportionate manner, the operation of managers' funds."

The issue of an independent Arch cru inquiry was also brought up during the second reading of the Financial Services Bill yesterday evening. Tom Greatrex MP suggested it would help to create a more robust regime to protect consumers and help the FSA's successor body, the Financial Conduct Authority (FCA), prevent similar failures.

The co-chairman of the All Party Parliamentary Group on Arch cru said the findings of an inquiry "could be used to inform a detailed discussion of the proposed FCA, and to ensure that the body is established with the resources, expertise and powers necessary to minimise the opportunity of anything like the Arch cru failure happening again".

He added the inquiry would help to make the Bill "as robust as possible" and said it was the government's responsibility to act when the FSA "admits that it did not know what was happening" with the structure of the investment vehicle.

Greatrex also reminded the house of the impact of the Arch cru collapse on consumers and the need for better protection.

"We must be confident that in dealing with the consumer aspects of regulation, the successor body does not fail in the way its predecessor did," he said.

"To ensure that, we need to know what did not work under that predecessor regime, so that there is confidence in the successor body and people are protected in the right way."

Greatrex also pointed out the current version of the new Bill does not include any provision for reports from independent inquiries into regulatory failures to be laid before Parliament and called for amendments to ensure this would be the case.