Financial Services Regulation: Measuring Success – Call for Proposals

The HM Treasury has published the consultation outcome on a „call for proposals“ launched earlier this year as regards measures to evaluate regulatory efficiency and the performance of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) (EventID 21133).
##### Background
To recall, in view of new powers provided to the Treasury via the Financial Services and Markets Act 2023 which enables the Treasury to direct the FCA and PRA to publicly disclose information it deems useful to assess the authorities‘ ability for discharging their regulatory functions and in view of the new objective of the FCA and PRA to advance international competitiveness of the UK financial market, the Treasury sought ideas on information or metrics that should be made public by the authorities to „evaluate their performance“.
##### Feedback and way forward
The HM Treasury has received a large number of responses to its „call for proposals“. Most respondents agreed that the HM Treasury should require the FCA and the PRA to make available certain information to the public. In fact, 75% were supportive of the idea, while the remaining 25% were primarily concerned about proportionality and possible additional information requirements of firms to prepare this information.
As far as the content of this information is concerned, there was a large array of metrics that responsive financial services firms sought to have published on a regular basis covering areas such as:
– international competitiveness (e.g. information on the number of entrants and exits from the UK market or the speed of authorizations compared to other jurisdictions),
– regulatory burden (e.g. information on the number of returns filed by firms per sector or information on the outcome of a new satisfaction survey among supervised firms on proportionality and effectiveness),
– policy costs (e.g. information on actual vs. the intended costs of new regulations or policies),
– regulatory efficiency (e.g. information on the annual number of authorizations along with approval and rejection rates and the reasons for rejections), or
– innovation (e.g. information on the number of firms approved for participation in FCA sandboxes or on the number of laws / rules per year advancing the objective of innovation).
Other areas involved supervision and enforcement (primarily statistics), financial stability (also primarily statistical information), and engagements with stakeholders. A full list of topics addressed by respondents may be viewed on page 10 through 11.
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The HM Treasury has subsequently consulted with the two regulators and agreed to mandate the FCA and PRA to publish various of the above noted information on a quarterly, bi-annual, or annual basis. A full list of these upcoming publications, including their frequency, is provided on page 14 and 15 concerning the FCA and page 17 and 18 concerning the PRA.
The Treasury expects that a first set of metrics will be published by summer 2024.