Shadow chancellor corrected by FSA

Responding to demands by shadow chancellor Michael Howard for a full investigation into regulatory breaches by the secretary of state for Transport, Sir Howard Davies wrote: ‘Your letter raises the possibility of “other regulatory breaches”, such as whether there were any false or misleading statements.

‘I should explain that, until the Financial Services and Markets Act 2000 comes into force, – responsibility for pursuing these offences lies with the Department of Trade and Industry and the Serious Fraud Office, not the FSA.’

The shadow chancellor’s request for an inquiry into transport secretary Stephen Byers’ decision on the beleaguered rail company comes just days after Sir Howard gave evidence to the cross-party Treasury select committee. The FSA is asking Railtrack to disclose what it knew about its financial position and when. The UK Listing Authority, now part of the FSA, has written to Railtrack demanding further information on any exchanges between the government and the company.

‘In the light of subsequent assertions, the request has been widened, to cover the period since 24 May, when the company announced its preliminary results,’ wrote Sir Howard.

The FSA will take on its full powers, including the power to fine directors, on 1 December but they are not retrospective. Until that date, it is the DTI’s responsibility to looks at the role of regulation of government department and their involvement in any market manipulation.

Howard was reported as saying he was ‘surprised’ it was the DTI’s job to investigate. ‘It is extraordinary that the government should act as judge and jury on its own actions. Nevertheless, if Sir Howard is right, there is a clear onus on the DTI to launch such an inquiry,’ said the shadow chancellor.


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