The boss of the Financial Conduct Authority has said he is prepared to investigate a potential leak of market-sensitive information that sparked a rally in bank shares hours before John Healey’s maiden Budget.

In a letter to the Treasury Committee, Nikhil Rathi vowed to engage with Treasury and Cabinet Office officials over how the details of the Chancellor’s windfall tax on banks ended up in the press, and whether “any unlawful disclosure of inside information may have occurred”.

The watchdog chief wrote that parliamentary scrutiny like select committees and leak inquiries were usually a preferred process for “passing judgment on political discourse and government communications”.

But he added the City’s top regulator may “choose to intervene where that discourse, or poor information handling, impacts markets improperly”.

“We stand ready to consider the specifics of any evidence provided to us by Cabinet Office and HMT to decide what, if any, action it is appropriate for us to take,” he said.

Rathi was responding to a letter that Meg Hillier wrote last week, in which the Treasury Committee chair asked whether an apparent leak of the windfall tax’s severity constituted an “improper release of inside information”.

Shares in high-street lenders surged in the hours leading up to the Budget, after Bloomberg News revealed the heavily trailed banks surcharge would only be temporary and not be as high as some had speculated. Lloyds and Natwest shares climbed as much as four per cent before the levy was formally announced, while Barclays jumped 3.7 per cent.

“This appears to have been more than idle speculation,” Hillier wrote in her initial letter, “and it has implications for relevant securities.”

Reeves Budget sparks Treasury probe

Last year, preparations for Rachel Reeves’ final Budget were plunged into disarray by a wave of leaks and briefings. The then-Chancellor made a speech preparing voters for a manifesto-busting income tax rise – before pulling back from the idea amid pressure from Number 10. Policies including a freezing of income tax thresholds, a levy on electric vehicles and a tourist tax all became public knowledge in the pre-Budget period, and the decision to abort the income tax plans sparked a sharp jump in gilt yields.

The rampant speculation prompted the Treasury to launch an inquiry into the leaks. Minister James Murray said the probe, which reported in February this year, would investigate the “security processes to inform future fiscal events”.

In a parallel letter to Treasury permanent secretary James Bowler, Hillier said it would be “deeply concerning” if the leaks were unauthorised given government efforts to tighten Budget security.

She also asked Bowler to confirm that neither banks – nor their trade bodies – were told of the changes “in outline or with specifics” before the Budget, and to reveal how many people had prior access to the policy’s final structure. The Treasury has not responded to the committee’s letter.