City group calls for scrutiny of UK regulators’ impact on competitiveness against international peers
Greater comparison of the UK’s financial regulators to their international counterparts is needed to better evaluate progress on their new secondary objective for competitiveness and growth, a top City body has argued.
Research from TheCityUK and law firm Freshfields Bruckhaus Deringer found that while the metrics UK regulators will use to report against this objective will provide “world-leading transparency and accountability”, deeper scrutiny was needed.
It argued for “meaningful international comparison” of the Financial Conduct Authority (FCA) and Prudential Regulation Authority’s (PRA) objectives and performance metrics.
After analysing financial regulators across 21 jurisdictions, ranging from major financial centres to offshore venues, the report found that while several have a comparable secondary objective, only a few publish metrics on par with those set for the UK regulators.
As an increasing number of firms snubbed London and to list in other financial markets last year, the government introduced a statutory mandate in the Financial Services and Markets Act for regulators to consider the UK economy’s competitiveness when making decisions.
Thursday’s report called on the government and regulators to develop an “international benchmarking framework” including both operational metrics and a broad range of qualitative indicators for a wider assessment of how the regulators’ activities impact competitiveness.
It added that the development of this framework could be the role of a new body but stressed that it would need “careful consideration” around issues like cost, remit and relationship with Parliament, regulators and industry.
Miles Celic, chief executive of TheCityUK, said: “As the UK navigates its future in an increasingly complex and competitive global landscape, a rigorous, evidence-based discussion on regulatory impact has never been more critical.
“It won’t be an easy task, but creating a framework that enables comparisons between the UK and the rest of the world will be hugely beneficial to understanding how our regulators are advancing UK competitiveness and growth, to guiding effective policy development and to ensuring the UK has the best regulatory environment for businesses to thrive.”
City minister Bim Afolami added: “I strongly welcome today’s report from TheCityUK and Freshfields which will help us benchmark and build on our performance.”
In response to the report, an FCA spokesperson told Morning Wire: “TheCityUK report recognises that we are already providing world-leading standards of accountability and transparency, providing metrics that very few other regulators do. We will actively engage with suggestions on an international benchmarking framework.”
The PRA declined to comment.