Financial watchdog ‘stands ready’ to take action over potential Budget leak

The financial watchdog has said it stands ready to take action over a potential leak of market-sensitive information which appeared to raise bank share prices before the Budget.

The Financial Conduct Authority (FCA) said it would engage with the Treasury and Cabinet Office over concerns that details of changes to bank taxes emerged before Chancellor John Healey delivered his fiscal statement last week.

It follows concerns raised by Treasury Committee chairwoman Dame Meg Hillier that a potential leak of market-sensitive information may have led to bank shares increasing in value.

The Labour MP, in a letter to the FCA, referred to a Bloomberg report containing accurate details of planned changes to bank taxes before the October 28 Budget.

The article published on Wednesday morning stated the planned increase in the bank corporation tax surcharge “won’t return it to the previous 8% level” and would therefore be less severe than the sector had expected.

Dame Meg said: “This appears to have been more than idle speculation and it had implications for relevant securities.”

In a response published on Tuesday, FCA chief executive Nikhil Rathi said the Treasury and Cabinet Office would be “best placed to ascertain and determine whether and how any unlawful disclosure of inside information may have occurred”.

He said the FCA “will engage with them accordingly”, adding the regulator would consider any evidence to determine whether action was warranted under market abuse rules.

“We stand ready to consider the specifics of any evidence provided to us by Cabinet Office and HMT to decide what, if any, action it is appropriate for us to
take under MAR,” he said.

Mr Rathi said parliamentary scrutiny was a better way to hold the Government accountable for political discourse and communications.

“We may, however, choose to intervene where that discourse or poor information handling impacts markets improperly,” he wrote.