PM says inquiry will report back by Christmas so that its proposals can form part of the financial services bill
David Cameron has announced that a joint committee of MPs and peers will investigate the banking industry by the end of the year, in the wake of growing political anger at recent scandals.
Its remit will be to examine issues of “transparency, conflicts of interest and the culture and professional standards of the financial services industry including the interaction with the criminal law”.
The inquiry, which will be chaired by Andrew Tyrie, the chairman of the Commons Treasury select committee, will be set up within days and will have the support of Treasury officials.
The prime minister said it would have the power to examine witnesses under oath as well as gain access to all relevant papers. It will have most of its hearings in public and, Cameron pointedly said, former ministers and advisers will be called – a reference to Ed Balls, a former economic secretary to the Treasury, and Ed Miliband, a former Treasury special adviser. “No one would like to see the shadow chancellor in the dock of a courtroom more than me,” Cameron said.
The inquiry will report back by Christmas so that its proposals can form part of the financial services bill, which will implement the reforms recommended by the Vickers inquiry.
Following Cameron’s announcement, Miliband said he did not think a parliamentary inquiry would be enough.
But Cameron said the Labour leader’s remarks were demeaning to the Commons and Lords, adding there was “no reason that parliament cannot get to the bottom of this. He said few people were as qualified to undertake the inquiry as Tyrie”.
The inquiry would be swift and strong enough to get to the answers, he added.
Former chancellor Alistair Darling likened the proposed inquiry to be a truth and reconciliation inquiry, and pointed out that it had been the Conservatives who had pressed the last Labour government to do very little on regulation.
Labour did not say immediately if it would co-operate with the inquiry, insisting it would not play student politics on the issue.
Labour said instead it would in the short-term press ahead with a plan to stage a vote in the Lords during the committee stage of the financial services bill calling for a public inquiry into banking.
That call is unlikely to be supported, leaving Labour with the option of co-operating with the inquiry, or running a boycott that might be misunderstood outside Westminster.
Setting out Labour’s broad position an official said: “We do not think the great and the good of Westminster should investigate the great and the good of the City of London.”
The danger with a parliamentary inquiry including even one with a large number of experienced peers is that it descends into party politics, rather than becoming a serious evidence-gathering process.
But the government is genuinely concerned that a judicial inquiry will simply take too long, and miss the chance to inform the legislation implementing Vickers commission recommendations, as well as financial regulation legislation.