Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether it is Government policy for the Financial Conduct Authority and Prudential Regulation Authority to discharge their functions consistently with the goals of the (a) Paris Agreement and (b) global greenhouse gas emissions reductions required to meet those goals.

The Chancellor sent letters of recommendations to the Financial Conduct Authority (FCA) and Prudential Regulation Committee on 23 March 2021. These letters make recommendations about aspects of the government’s economic policy that the two organisations should have regard to when considering how to advance their objectives and discharge their duties. For the first time, these letters specified that the regulators should have regard to the government’s commitment to achieve a net-zero economy by 2050 under the Climate Change Act 2008 (Order 2019).

However, it is important to note that both the FCA and Prudential Regulation Authority (PRA) are operationally independent, non-governmental bodies. Although the Treasury sets the legal framework for the regulation of financial services, it has strictly limited powers in relation to the FCA and PRA. In particular, the Treasury has no general power of direction over the FCA and PRA.