Source · Select Committees · Treasury Committee
Recommendation 15
15
Paragraph: 100
Regulatory independence is critical for the competitiveness and effectiveness of UK financial services regulation.
Conclusion
Regulatory independence is critical for the competitiveness and effectiveness of UK financial services regulation. The host of new accountability mechanisms proposed by the Treasury must be carefully reviewed in this light, to ensure that regulatory independence is not compromised. These mechanisms largely seem reasonable as individual changes, but there is a risk that the collective impact could be excessive in its impact on regulators’ resourcing, as well as their ability to make decisions quickly where needed.
Paragraph Reference:
100
Government Response
Acknowledged
HM Government
Acknowledged
The government notes this recommendation. Throughout the development of the FRF Review, the government has considered the collective impact of the additional measures on regulators’ operations and independence. The government is confident that the final package strikes the right balance between democratic accountability, regulatory agility, and regulatory independence. The regulators will be responsible for operationalising the new accountability requirements set out in the Bill and so the overall impact will, to a large extent, depend on how the regulators choose to carry out these functions. In line with the approach taken already in existing, similar provisions in FSMA, the legislation establishing the enhanced accountability mechanisms is relatively high level and provides the regulators with flexibility on how to carry out the new requirements in an appropriate manner. For example, the Bill sets out requirements for the regulators to publish statements of policy for reviewing their rules and conducting cost-benefit analysis (CBA). The legislation includes high-level requirements on what must be covered as part of these statements, but the detail of the regulators’ approach to reviewing rules and CBA is for the operationally independent regulators to set out. Similarly, the legislation requires the regulators to each establish a CBA panel and consult the panel as part of their policy development,