The FCA must investigate Budget leaks
The Financial Conduct Authority must launch a full, independent investigation into potential market abuse by the Treasury ahead of the Budget, says Blake Stephenson
Markets rely on trust, clarity, and the even‑handed release of information. When those principles are compromised, confidence falters. That is why the Financial Conduct Authority (FCA) must launch a full, independent investigation into potential market abuse in the weeks before the Budget.
This is not trivial, nor a fixation by the opposition on process, as ministers would have you believe. It goes to the heart of how the UK’s economy is governed, how ministers communicate with the public and our markets, and whether our regulators are willing to uphold the standards they claim to enforce.
MPs – including myself – have been vocal in parliament about the troubling pattern of briefings, leaks and selective disclosures that preceded the Budget. The concern is simple: that the Treasury painted an unduly bleak picture of the public finances, despite receiving more positive information from the Office for Budget Responsibility weeks earlier. That pessimism fuelled speculation about tax rises and shaped market expectations. If ministers or officials knowingly disseminated misleading or incomplete information, that is not politics – it is potentially unlawful.
The principle is longstanding: Budget information must be handled with the utmost care. As the chairman of ways and means has reminded the House, premature or selective disclosure of fiscal policy is “a supreme discourtesy” to Parliament and a breach of the Ministerial Code. It is also a potential breach of market‑abuse rules.
The government’s response has been to insist that all communications were appropriate and that any concerns should be addressed through internal processes. The Treasury has launched its own leak inquiry, and ministers have argued that this is the proper route.
Having spent 15 years before entering parliament working in regulatory compliance, I know all too well that the FCA expects failures to be investigated by an independent party,
not the very department at fault. And quite right too.
A leak inquiry is not a market‑abuse investigation. It is not designed to assess whether information was selectively disclosed, whether statements were misleading, or whether markets were manipulated. It is an internal process run by the very department whose conduct is in question, and it’s not good enough.
Markets and the British public do not need a Whitehall‑managed review. They need an independent regulator to do its job.
The FCA’s recent letter to the Treasury select committee is deeply disappointing. Rather than launching an investigation, the regulator has said that government communications are “a matter for Parliament” and that it will simply stay informed about the Treasury’s internal inquiry.
Abdicating responsibility
This is an abdication of responsibility. The FCA has previously been emphatic that it will “not hesitate to act” against market manipulation or the dissemination of false information. Yet when faced with allegations involving the Chancellor and the Treasury – arguably the most market‑sensitive actors in the country – it has hesitated.
A regulator that is bold with regulated firms but timid with ministers and government officials is not a regulator acting independently. And this raises a difficult but necessary question: is the FCA genuinely independent when the conduct of the government itself is at stake?
Independence is not just a structural feature; it is a behavioural one. It is demonstrated through action – especially when action is uncomfortable. The FCA has shown in the past that it is willing to be assertive. It has named and shamed firms, issued public warnings, and launched high‑profile investigations into far less consequential matters.
Yet now, when the integrity of Budget‑related information is in question, the regulator has chosen caution over courage.
Why does the regulator claim to be fearless in the face of market abuse, yet shrink from investigating the most powerful institution in the financial system?
If the FCA is seen to treat the government differently from the private sector, its credibility will suffer lasting damage.
Why has the regulator been willing to publicly challenge firms but unwilling to scrutinise the Treasury? Why does it claim to be fearless in the face of market abuse, yet shrink from investigating the most powerful institution in the financial system?
The FCA cannot have it both ways. Either it enforces the rules consistently, or it becomes a political actor – one that chooses its targets based on convenience over principle.
The British public deserves clarity. Markets deserve certainty. Parliament deserves honesty. And the FCA must demonstrate that its independence is real, not rhetorical.
That means launching a full investigation into the conduct surrounding the Budget: the briefings, the leaks, the statements and the market impact. Anything less risks undermining trust not only in the regulator, but in the integrity of the UK’s economic governance.
Blake Stephenson is MP for Mid Bedfordshire