Charles Randell is a professional regulator, who – though retired from his job as the Chair of the FCA – still takes a proper interest in how we are protected from those who would cause us financial harm. He is not a do-gooder, he is an extremely successful lawyer who has made his fortune being a little cleverer than those on the other side. So he’s worth reading – and he’s published some comments on linked in , which I’m posting here. Because they made me think – and perhaps will make you think too!
There are two current reviews of UK regulation: by the Department for Business and Trade (DBT), and by the House of Lords Industry and Regulators Committee.
There was no mention of major reform of regulation in the King’s Speech, so it’s not clear whether work by the DBT will have relevance this side of the election – and who knows what relevance it may have after that. By contrast, the cross-party membership of the House of Lords Committee gives it relevance whoever wins the next election.
A key question in the Committee’s review is: who should regulate the regulators? The Committee has just published written evidence from a range of different interested parties I gave both written and oral evidence to the Committee.
So far as financial regulation is concerned, most responses fall into two groups:
• Those who feel that Parliament should be responsible for scrutinising the regulators. Within this group, a number argue for better resourced committees, or possibly a joint committee of the two Houses of Parliament. (e.g. TheCityUK, UK Finance)
• Those who feel that, as well as the existing or an enhanced system of Parliamentary oversight, there should be an additional public body to scrutinise the regulators. What is striking about this group is just how different their objectives are from one another. The right-wing “think tank” the Centre for Policy Studies (CPS) focusses on the need for an inventory of regulations so that the cumulative cost of regulation can be assessed by a Regulatory Audit Office (benefits are also mentioned, although in passing). Others, such as Julia Black, the Conservative Regulatory Reform Group and Lord Bridges, focus on improving the quality and coherence of regulation and supporting Parliamentary oversight. Lord Bridges draws on work done by the International Regulatory Strategy Group sponsored by TheCityUK, although – interestingly – their own submission does not major on this.
A central question is whether such a body should be independent of government. The Conservative Regulatory Reform Group prefers an office within government.
By contrast, Professor Black and Lord Bridges suggest a body that is independent of government, producing reports that could be used to enhance Parliament’s role in holding regulators to account.
My own view, for what it is worth, is that a scrutiny body subject to government control would soon be captured by industry interests, regardless of which party was in power. Government would also find it difficult to avoid interfering in the processes and judgments of the regulators in response to short term political pressures. And without independence and a balanced membership embracing people who understand the experience of users of regulated services as well as providers, such a body would lack credibility.
I look forward to the Committee’s report.
(Photo: copyright House of Lords)
I wonder what we should read into the fact that TPR did not make a submission to the Lords Committee.
To answer Con’s point about the lack of a TPR response to the Lords Committee, might it have a bit to do with the fact that TPR doesn’t regulate its own staff DB pensions? They might be asked about the 0.7% pa reduction in the underlying discount rate with effect from April 2024 or the associated but surreal £7bn pa deficit reduction contributions payable to 2039!