Source · Select Committees · Treasury Committee
Recommendation 16
16
Paragraph: 105
The Treasury should be sparing in its use of the proposed power to require regulators...
Conclusion
The Treasury should be sparing in its use of the proposed power to require regulators to review their rules, and should not use it to implicitly require the regulators to consider a general ‘public interest’ requirement for rulemaking. Each use of this power is a potential weakening of the independence of the regulators. Regulators should not be expected to reverse or adjust regulation where such regulation is deemed to remain appropriate to carry out the regulators’ statutory objectives. That being said, the regulators should not impose costs without being able to show benefits.
Paragraph Reference:
105
Government Response
Acknowledged
HM Government
Acknowledged
The government notes this recommendation. Clause 27 of the FSM Bill (which will insert new sections 3RC and 3RD into FSMA) introduces a power for the Treasury to require a regulator to review its rules. This power is designed to be used only in exceptional circumstances where the Treasury considers that it is in the public interest to direct the regulators to review their rules, for example, where there has been a significant change in market conditions, or other evidence suggests that the relevant rules are no longer acting as intended. The rule review power also responds to concerns from stakeholders who considered that there were few avenues available to challenge regulators’ rules. Any reviews initiated under the power will be conducted by the regulators or, where appropriate, an independent person. The regulator will be responsible for taking any action it deems appropriate in response to any recommendations arising from the review. The government considers that the rule review power offers an important avenue for scrutiny of the regulators’ rulemaking where required, while still maintaining the operational independence of the regulators to set detailed regulatory standards that apply to firms.