Regulators should measure ‘burden’ of decisions after legislative overhaul, industry says
Finance groups have called for regulators to report on a new range of metrics to ensure they are meeting their statutory obligations.
After the Financial Services and Markets Bill passed into law last week, regulators will have hugely increased responsibility for adapting and amending onshored EU regulations. As part of the Bill, regulators will have a new mandate to consider ‘competitiveness’ when making regulatory decisions.
The Treasury has been consulting on possible metrics to measure the performance of regulators amid concerns that a stifling regulatory atmosphere is holding the City back against global rivals.
Finance groups The City UK and UK Finance both proposed a number of different measures which would help to measure the performance of regulators against its new objective.
Daniel Wraith, strategic policy manager at UK Finance said: “Greater consideration of the costs of regulation and a drive for increased operational effectiveness will be key to delivering on the new objective.
“Measuring these is an opportunity to ensure the UK remains a thriving, internationally competitive financial services centre,” he continued.
Both suggested that regulators should pay attention to the regulatory burden firms face as a result of its decisions.
The City UK said regulators should publish the “cumulative costs to firms” of regulations coming into force in the previous year. UK Finance also said regulators should estimate and track the “regulatory burden” of new measures.
To assess competitiveness, The City UK argued the number of new applicants for firms wanting to do business in the UK should be measured.
Metrics to assess the effectiveness of regulators were also put forward. Many have criticised the length of time it takes for firms to secure authorisation.
UK Finance suggested regulators should measure and report on operational effectiveness, including the speed of applications and the quality of supervision.
Mazars’ Anindya Ghosh Chowdhury said it will be difficult for the PRA to “relax” regulations in the wake of Silicon Valley Bank’s collapse earlier this year.
“How it achieves its competitiveness goals will be interesting to observe,” he commented, suggesting that many decisions which may seemingly harm competitiveness – such as requiring international banks to subsidiarise – would likely boost stability.
Gavin Haran, head of policy for asset management at Macfarlanes, said that a permanent body would be the best method of holding regulators to account.
“A body like an Office for Regulatory Accountability (OFRA) would have the remit and expertise to engage with both the regulators’ day-to-day business and the long-term strategic direction of UK financial services,” he said.
“Whatever approach is adopted, many in the City want to see a stricter separation between the protection of retail consumers, and the regulators’ approach to wholesale markets and the City’s international competitiveness.”