IRSG response to HM Government Financial Services Future Regulatory Framework: Proposals for reform

Published 1 Apr 2022

The IRSG welcomes the opportunity to respond to this final phase of the consultation on the UK's future regulatory framework. The IRSG has been focused on the regulatory framework since it published its first report ‘The Architecture for regulating finance post-Brexit’ in 2016. The IRSG response to this phase of the consultation builds on points from that report and a follow-up report produced in 2020.

As well as responding to the specific questions the IRSG response sets out:

  1. The IRSG are supportive of the proposals set out in the consultation but believe there may be too large a gap between the high-level legislation that sets the overall objectives of UK policy and the specific rules applying to products or markets..
  2. The proposals will generate significant additional tasks for the UK parliament, government, and regulators. To operationalise the changes, the new model will require significant extra expertise and resources.
  3. The process of transferring onshored legislation to regulators rulebooks needs to observe the same objectives of ensuring continuity and certainty unless there is an intention to change policy.
  4. There is a significant gap the in framework for democratic oversight. The IRSG encourages Parliament to take the opportunity to consider additional mechanisms to build that oversight.
  5. The overall goal of the proposals should be to drive an appropriate regulatory culture for this new era. Effective policy making and oversight needs to be supported by effective day to day engagement with market participants and other stakeholders.

We are grateful to members of the IRSG Architecture for regulating finance workstream for their contributions and to Tracey McDermott, Chair of the workstream for her role in leading the response.