The Government is considering setting up the Prudential Regulation Authority on the basis that it can implement rule changes without consulting the industry, according to warnings from regulation consultants Bovill.
The PRA will be responsible for the prudential regulation of banks and other deposit-takers, investment banks and insurers and will be a subsidiary of the Bank of England.
Bovill is concerned about a clause in the Treasury’s consultation paper on the new regulatory framework which says that the PRA may not have to consult before putting rules in place.
The paper states: “The Government is considering whether the rule-making unction should continue to be subject to statutory processes, including consultation with a practitioner panel, wider public consultation and the duty to carry out detailed cost-benefit analysis prior to the introduction of any new rules.”
Bovill chief executive Ben Blackett-Ord says: “It may not be statutory for the PRA to consult on rule changes, so if it wants to change a rule it will change a rule. I think there are some potentially scary issues there.”
Lansons public affairs and regulatory consulting director Richard Hobbs says the PRA will be consulting on highly technical issues so the clause is likely to be an attempt to make the consultation process less cumbersome.
He says: “I think that, for the PRA, some streamlining of consultation would be highly satisfactory but it should also be required to consult appropriately, with professional bodies, for example.”
Zurich UK intermediary sales director Richard Howells adds: “Experience tells us that better outcomes come about as a result of a good depth of consultation.”