Financial Services Regulation: Measuring Success – Call for Proposals

In view of the new upcoming obligations and responsibilities of government agencies and financial market regulators that are described in the currently scrutinized Financial Services and Markets Bill, the HM Treasury has launched a call for proposals on how to measure the performance of the regulators in connection with these new obligations and responsibilities and how to go about executing the new responsibilities of the Treasury.
Specifically, the Bill – if passed by Parliament – will
– introduce a new requirement of financial market regulators to facilitate and ensure international competitiveness of the UK financial market and ensure growth of the market in the medium and long-term; and
– empower the HM treasury to „direct“ the Financial Conduct Authority, FCA, and the Prudential Regulation Authority, PRA, to publish information that the government finds necessary to assess their ability for discharging their regulatory functions. This information will be on top of the one already published in the regulators‘ annual reports where they have to explain how certain regulatory measures advance their own and the government’s objectives.
To begin with the second issue, the HM Treasury is now outlining and seeks comments on its proposed approach make use of this power to direct. In detail, at first, the Treasury would consult with all relevant stakeholders (financial services firms, consumers, trade associations) and use the evidence gained from such consultations to determine whether or not the exercise of the power is indicated. The Treasury would then consult with the regulator in question to make a final determination. In this context, it shall be noted, that regulators will not be obliged to disclose information that is deemed confidential and may produce adverse effects when made public.
As regards the first issue, the Treasury seeks ideas on how the performance of the FCA and the PRA can be measured as far as their objectives of ensuring international competitiveness of the UK financial market and ensuring growth of the market in the medium and long-term is concerned. As an example, the Treasury mentions the current FCA metrics that is published quarterly now and outlines the target processing times for applications for authorization compared to the actually needed processing times. Similar metrics are sought to measure the performance as regards the new objectives.
Therefore, the Treasury has enclosed the following two questions – as quoted:
1. Do you agree with the government’s approach to the exercise of the power of direction in Clause 37 of the FSM Bill?
2. What are the key metrics that the FCA and the PRA should publish in relation to their new secondary growth and competitiveness objectives?
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Any ideas, comments, and specific proposals are highly welcome, so the Treasury. The consultation will close on July 4, 2023