City watchdog ‘stands ready’ to act on bank windfall tax Budget leak

Nikhil Rathi, the head of the Financial Conduct Authority (FCA), has expressed readiness to investigate a possible leak of market-sensitive information that affected bank shares before the release of Chancellor John Healey's Budget. In a letter to the Treasury Committee, Rathi vowed to work with Treasury and Cabinet Office officials to determine if "any unlawful disclosure of inside information may have occurred."

Rathi stated that, while parliamentary scrutiny, including select committees and leak inquiries, is typically a preferred method for assessing political discourse and government communications, the FCA might "choose to intervene where that discourse, or poor information handling, impacts markets improperly." He added that the watchdog is prepared to consider the specifics of any evidence provided to decide on the appropriate course of action.

Treasury Committee Chair Meg Hillier raised concerns about whether the leak of the windfall tax's severity constituted an "improper release of inside information." Shares in major high-street banks surged in the hours leading up to the Budget, following the revelation by Bloomberg News that the surcharge would be temporary and not as high as initially speculated. Lloyds and NatWest shares increased by up to four percent, while Barclays rose by 3.7 percent.

Hillier accused the FCA of receiving market-sensitive information ahead of the Budget, stating that the leak had implications for relevant securities. She urged the FCA to investigate the security processes surrounding fiscal events and determine if banks or their trade bodies were informed of the changes "in outline or with specifics" before the Budget. Hillier also requested information on the number of individuals who had prior access to the policy's final structure.