TheCityUK response to the House of Lords Industry and Regulators Committee’s Inquiry into UK regulators
Our response focuses largely on the financial services regulatory framework, which has undergone an extensive programme of change in comparison to other industries.
A stable and predictable regulatory environment is a vital foundation for ensuring the long-term competitiveness and success of the UK. However, regulatory policy also needs to be effectively balanced to deliver an environment which is neither ‘over regulated’ nor ‘under regulated’, but proportionately regulated.
To support economic growth and drive international competitiveness, UK regulators will need to adopt a growth mindset and accept a certain degree of risk and uncertainty in the system to allow for innovation and economic growth. As they take forward their activities, they will need to be focused on long-term regulatory outcomes rather than processes. We encourage regulators, government and Parliament to acknowledge that effective regulation and delivery of long-term growth involves a degree of risk tolerance and that a zero-failure culture inhibits growth and innovation.
Our key response and recommendations are:
- We support the principle of regulatory independence, but government should be responsible for setting the overall policy, with regulators delivering in line with policy. We would like to see more alignment of UK regulators with government policy that supports the UK’s economic growth, and more coherence between regulators that positively supports investment and growth.
- We recommend a more systematic and rigorous approach be taken to assessing how regulators are fulfilling their objectives, and that further work be done to increase transparency on their performance against those objectives.
- Parliament has an important role in overseeing the work of the regulators and holding them to account for their performance against their objectives. But a balance needs to be struck between oversight and the need for de-politicised flexible, agile, regulatory decision-making.
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