New research by TheCityUK and Freshfields Bruckhaus Deringer shows that the UK financial regulators’ metrics to track progress against their secondary objective for competitiveness and growth will provide world-leading transparency and accountability. However, to get a more complete picture of their progress and impact on this agenda, comparison against international counterparts is essential.
The report, ‘Advancing international competitiveness and economic growth: how do financial regulators compare?’, which looks at financial regulators across 21 jurisdictions, shows that while several regulators have a comparable objective to advance competitiveness and growth, only a few publish metrics on par with those set for the UK regulators. This gap makes benchmarking across jurisdictions very challenging.
Recognising data limitations for cross-jurisdictional comparison, TheCityUK and Freshfields identify several approaches to developing a holistic international benchmarking framework. The framework should include both operational metrics and a broad range of qualitative indicators that take a wider view of how the regulators’ activities impact competitiveness. They urge government and the regulators to develop the framework in partnership with industry and its outcome ultimately helping to foster regulations that are more efficient, effective, resilient and responsive.
The study also reflects on what role a new or existing body could play in enhancing regulatory scrutiny and accountability, stressing the need for careful consideration and planning on its potential creation. Questions around costs, remit, scope, resourcing and model would be key, as would how this body interrelates with Parliament, regulators and industry.
Miles Celic, Chief Executive Officer, 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.”
Emma Rachmaninov, partner at Freshfields, said, “In a dynamic global environment, it's crucial for the UK to evaluate its regulatory effectiveness on an international scale. Our latest research, spanning 21 jurisdictions, uncovers a need for deeper scrutiny of financial regulators' objectives and performance metrics.”
Chris Bernard, knowledge lawyer at Freshfields, adds, “As we navigate the challenges ahead, it’s important we foster a regulatory environment that not only ensures transparency and accountability but also forges a path guided by evidence, collaboration, and a commitment to excellence in regulation.”
Economic Secretary to the Treasury, Bim Afolami MP, said, “The financial services regulators have a vital role to play in facilitating the international competitiveness of the UK economy. I strongly welcome today's report from TheCityUK and Freshfields which will help us benchmark and build on our performance.”
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