UK Government Consults on Regulatory Accountability and Transparency Metrics

On May 9, 2023, the U.K. government published a Call for Proposals on which metrics the Financial Conduct Authority and the Prudential Regulation Authority should be required to publish for the new secondary growth and competitiveness objectives. The new secondary objectives, which will be brought in under the Financial Services and Markets Bill, will compel the FCA and PRA in carrying out their functions to support long-term growth and international competitiveness. For the PRA, the new growth and international competitiveness objective will operate in conjunction with its existing secondary objective to facilitate effective competition in the markets for services provided by PRA-authorized firms (banks, large investment firms, insurers and credit unions). For the FCA, the new objective will go together with the FCA's three existing operational objectives of consumer protection, market integrity and competition.

The FSM Bill will bring some areas currently covered by retained EU legislation (REUL) into the Financial Services and Markets Act 2000, and transfer the responsibility for making detailed rules to the regulators to allow for a more agile approach by expert regulators. The additional rulemaking responsibility for the regulators will significantly increase their powers. How and whether those powers should be constrained or overseen has already been subject to much debate.

The FSM Bill makes provision to strengthen the regulatory accountability framework, including to ensure the regulators are accountable and transparent in how they advance their objectives. The regulators will be required to include in their published annual reports explanations of how their regulatory objectives have been advanced, including the new secondary objectives, and to explain how proposals on which they are consulting advance their objectives. Under a new provision introduced at report stage during the legislative process of the FSM Bill, HM Treasury will be empowered to direct the regulators to publish information where it is considered necessary for assessing how the regulators have discharged their functions.

HM Treasury is seeking feedback on its proposed approach to exercising the new power of direction requiring the regulators to publish information and the additional metrics that the regulators might be required to provide to ensure appropriate reporting on the new secondary objectives and reinforce the ability to examine the regulator's work in terms of advancing their new objectives. The Call for Proposals is open for submissions until July 4, 2023.

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