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<p>The Chancellor sent letters of recommendations to the Financial Conduct Authority
(FCA) and Prudential Regulation Committee on 23 March 2021. These letters make recommendations
about aspects of the government’s economic policy that the two organisations should
have regard to when considering how to advance their objectives and discharge their
duties. For the first time, these letters specified that the regulators should have
regard to the government’s commitment to achieve a net-zero economy by 2050 under
the Climate Change Act 2008 (Order 2019).</p><p>However, it is important to note that
both the FCA and Prudential Regulation Authority (PRA) are operationally independent,
non-governmental bodies. Although the Treasury sets the legal framework for the regulation
of financial services, it has strictly limited powers in relation to the FCA and PRA.
In particular, the Treasury has no general power of direction over the FCA and PRA.</p>
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