The economic secretary to the Treasury has urged regulators to remain on the “front foot” in the face of “rapid innovation and a digital age”.
Speaking at the UK Finance Annual Dinner yesterday (November 24), John Glen explained that when he was appointed to the role in January 2018, the future relationship with the EU was unclear.
“Today, the landscape is much clearer,” he said. “We’ve left the EU’s institutional framework. And step by step, where it makes sense, we are taking advantage of those new freedoms to refresh the UK’s position as the world’s pre-eminent financial centre.
“Now, part of that is about regulation. Both in the UK and abroad, I hear how respected our regulators are.”
Glen said: “There will always, of course, be times when our regulatory system could have performed better. What’s important, looking forward, is that we increase transparency and learn the right lessons for the future.
“I believe that our regulators must also remain on the front foot in the face of rapid innovation, and a digital age.”
“I fully support the ambition to transform the FCA into a more nimble and innovative regulator and look forward to seeing this ambition turned into reality over the coming weeks, months and years,” he added.
‘Fixed forever on tablets of stone’
Speaking at the dinner, Glen also said the industry needed a regulatory framework that was more agile and more responsive than it ever had been before.
“That avoids politicisation and posturing but gives decision-making to the independent and expert regulators, so that we can regulate better, more quickly, more flexibly,” he said.
“To my mind, it is a completely false choice to say that we have to choose between high standards or greater competitiveness. We need regulators who think carefully about both.”
When considering change, he explained that regulation should be able to evolve, meaning regulators should have the self-confidence to ask themselves whether they have got the right balance, whether there are any unintended consequences of what they have done, or whether they are placing too great a burden on firms trying to do the right thing.
He said: “We shouldn’t think of regulation as being like the Ten Commandments, fixed forever on tablets of stone. Regulation is not a science: it is the best attempt very good people make to calibrate and manage risk at a given point in the life of an economy or society.”
However, Glen went on to say that while regulators must be free to take action – and sometimes quickly – to tackle bad apples, they should also work collaboratively with industry, “to understand their often new business models, and to foster innovation and technological transformation safely and responsibly”.
He argued there was a case to be made for establishing a more interactive, rolling dialogue between the regulators and industry, “where we think of regulation not as just simply ‘policing’ the system” but as enabling the system, which in turn creates a better informed, more nimble regulation and reduces misunderstanding.