George Osborne has written to Andrew Tyrie MP, the Chairman of the Treasury Committee, to give the House of Commons the power, on the recommendation of the Treasury Committee, to decide whether a candidate for chief executive of the Financial Conduct Authority (FCA) should be appointed.

The appointment will be made on a renewable, five-year term set out in statute.

Tyrie said: “Parliament’s, and the Committee’s, role in the appointment and dismissal of the chief executive of the FCA has been greatly bolstered by the arrangements set out in this exchange of letters. As a result, Parliament will now be better placed to safeguard the FCA’s independence, as John Griffiths-Jones, its chairman, clarified in evidence this morning. The scope for interference – or the perception of interference – by the Treasury or Treasury Ministers is commensurately reduced.

“A commitment from the Chancellor that he expects these arrangements to be permanent provides a precedent, building on others between Ministers and Select Committees, including the appointment process for the chair of the OBR. Powerful quangos now need greater Parliamentary scrutiny. Without it the quango state will become accountable to no-one.”