The new sub-committee will take the lead in the scrutiny of financial regulatory proposals.

It will also have powers to send for persons, papers and records and agree reports.

The Treasury Committee said the sub-committee was needed due to a likely growth in the number of regulatory initiatives as regulators assume additional responsibilities following the UK’s exit from the EU.

It said the UK’s exit from the EU ‘presents an opportunity to establish a less bureaucratic and significantly more nimble scrutiny process’.

It will be chaired by the Rt Hon Mel Stride MP, and will initially consist of all the members of the Treasury Committee.

Mr Stride said: “Following the UK’s exit from the EU, our regulators have assumed significant new responsibilities. Those will require scrutiny, and Parliament has an opportunity to put in place a process which is less bureaucratic and significantly more nimble than was previously the case in the European Union.

“The Treasury Committee is well placed to conduct this scrutiny. We often consider new regulatory proposals and, given our responsibility to scrutinise the Treasury and its associated regulators, we can take a holistic view of regulatory change.

“Our approach will be targeted and flexible, with the new Sub-Committee devoted to the scrutiny of financial regulations and underpinned by a new and well-resourced unit of experts and specialists.”

The Committee plans to intervene at the consultation paper stage of the regulatory process, where proposals have been formed into draft texts but there is still clear scope for influence.

It is also forming a new Financial Services Scrutiny Unit which will include financial services specialists, Treasury staff members, and a legal adviser from the Office of Speaker’s Counsel. This unit will offer advice to the sub-committee on the likely impact, fitness for implementation and level of appropriate scrutiny for each proposal.

The sub-committee will ask:

• Is the policy justified and desirable? Is the balance between service providers, consumers and others the right one? Do the benefits outweigh any drawbacks?
• Is the regulator acting within their delegated power?
• Is the drafting of the necessary standard?

It will then take a decision on whether the proposal merited closer examination.

The sub-committee will start its work by scrutinising the Prudential Regulation Authority’s proposals for a ‘Strong and Simple Framework’ for banks and building societies.