The economic secretary to the Treasury has pledged transparency around the government's dealings with financial services regulators post-Brexit, as he said a rules-based approach was here to stay.
In a Treasury Committee evidence session held yesterday (26 May) for its inquiry into the future of financial services, John Glen was asked where the industry was headed from a regulatory point of view, and whether the UK would take a common laws approach - as historically has been - or whether it will be like the EU, which is a lot more rules-based.
Glen said: “We’ve always done things slightly differently and the FSMA 2000 approach delegates to our independent expert regulators the responsibility for developing rules, for facing rules, rather than directing across the rest of the 27 EU countries specific instructions, heavily detailed and technical instructions, to those national regulators.
“And that delegation of responsibilities is consistent with the perils of FSMA, and what we're looking at is an outcome-based approach and so that has sort of guided us and [is] a principle that we operate on and that will continue to be how we operate.”
Glen explained there needed to be a way to accommodate the will of parliament without creating ambiguities in the mandate that is given to expert regulators, to ensure they can be clear about what is being asked of them.
“What I see is continuing to give our regulators responsibility for detailed rules and have an outcome based approach to that,” he said.
“That is consistent with FSMA and that is something that I think we want to continue to embed.”
Glen also said there needed to be flexibility to ensure regulators were able to do what they needed to do as the market evolves.
He continued: “I want to make clear to consumers where the accountability for the regulators' actions lie as well and I also want to be clear that we have transparent consultation with parliament and with industry on how these things evolve.
“I think there's a public expectation, post Brexit, for us to be able to make decisions and execute decisions in parliament and see those follow through.
“But what we can't have is a situation where technical rules are manipulated by short term political considerations because that would undermine our reputation.”
Glen was questioned on how the legislation would be moved into the regulators' rule books and the time it will take to do so.
Glen agreed with MPs' concerns that it could take several years, simply because of the complexity of the task at hand.
“Much has been done to move legislation onto the statute book through the onshoring projects through all the statutory instruments that we did,” he said.
“What we've got to do now is work out how going forward this isn't a static single action and how those evolving rulebooks of the regulator work.
“My preference would be for us to have framework legislation that would then allow for those transfers through secondary legislation.”