The government has confirmed that it is looking at the recommendations put forward by the Bank of England’s Financial Policy Committee, including whether The Pensions Regulator’s remit should be extended to have regard for financial stability.

Responding to a letter from Work and Pensions Committee (WPC) chair, Stephen Timms, Pensions Minister, Laura Trott, and Economic Secretary to the Treasury, Andrew Griffith, said that the government “welcomes” the FPC’s recommendations and will consider them alongside the upcoming WPC report.

The letter also confirmed that the government is looking at whether financial stability should be something the TPR should have regard to, committing to report back to the committee when it has made a decision on this.

Timms previously wrote to the pair to seek further updates on the government response to the FPC's recommendations, as well as some of the issues raised by Griffith and Trott at a previous committee session.

Responding to Timms’ specific queries, the pair confirmed that work is underway with TPR to ensure that it is better able to gather relevant information in a timely fashion in order to mitigate risks.

“In order to achieve that we need to consider the data that it needs and the best way to obtain this,” the letter stated.

“The notifiable events regime is one way in which TPR can gather information in certain circumstances, and we are interested in pursuing this option but we want to evaluate all options before deciding on the best course of action including any potential future legislative change. We will work closely with TPR to assess the options.”

The letter also provided an update on queries around trigger points and feedback loops in liability-driven investment (LDI) funds, suggesting that the FPC’s recommendations should reduce financial stability risks around recapitalisation.

Additionally, it noted that the BofE is expected to conduct an exploratory stress test around non-bank risks this year, in an effort to improve the understanding of how different participants in the non-bank sector would react to a variety of scenarios.

In his initial letter, Timms had noted that while Griffith had suggested that the more TPR could be part of the “very tight working relationship” between the BofE, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), the better, the FPC does not have powers of direction in relation to TPR, as it does for the FCA and PRA.

Given this, he queried whether TPR should be included in section 9H of the BofE Act 1998 to give the FPC those powers of direction.

However, Trott and Griffith’s joint response confirmed that the government is “not intending to expand this to include TPR”.

In related news, FCA chief executive, Nikhil Rathi, has also written to Timms to provide an update following the watchdog's recent recommendations for asset managers designed to increase resilience of LDI strategies.

In particular, Rathi confirmed that the FCA is continuing to work with regulatory partners in engagement with this sector on implementing or complying with any further guidance or requirements issued by other authorities.

He also reiterated calls for the government to extend FCA’s perimeter to capture the full scope of investment consultancy services, noting that they are currently unregulated for their main activities.

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