The Financial Conduct Authority should be required to carry out retrospective cost-benefit analyses of regulation as well as more extensive analyses ahead of introducing new rules.
The committee’s report into the Financial Services Bill says it has received a large amount of evidence from financial services firms questioning whether the benefits of many new regulations outweigh mounting costs.
It says: “We continue to believe that periodic review of costs and benefits of financial regulations, once implemented, is required. Such reviews require a statutory base.”
The TSC’s report into the accountability of the FCA, published in January, said once the FCA and the Prudential Regulation Authority are up and running they should conduct a “fundamental review” of their cost-benefit analyses which should be “far more extensive”, including consultation with firms, representative bodies and regulatory panels.
The Government’s response to that report said it had amended the bill so regulators will be required to provide analysis and estimate of costs and benefits “where it is reasonably possible”.
The committee in turn responded saying the change does not provide “adequate assurance of improvement in current inadequate practice”.