Andrew Tyrie, chairman of the Treasury Select Committee, said: “The powers of direction provided to the FPC, when used, will affect the terms on which people can obtain mortgages and firms can obtain loans.
“The interim FPC has said that having the power of direction over loan to value and loan to income restrictions could be beneficial for financial stability. The International Monetary Fund agrees.”
However the interim FPC did not ask for this power on the grounds that the “use of the tools would require a high level of public acceptability”. Tyrie said that the statement revealed a lot.
“The Bank’s reluctance to make such a request suggests that they themselves doubt their ability to explain the need for these tools to the public.
“That is why it is important that we sort out the Bank of England’s accountability to Parliament and the public.
“The government’s proposals in the Financial Services Bill simply aren’t good enough. The Treasury Select Committee will continue to press for improvements.
“And we will ensure that the public gets a full explanation from the Bank when they use any of their macroprudential tools. Hence this inquiry.”
The deadline for written evidence submissions on this inquiry is 22 June.
