As TheCityUK emphasises, and we have previously mentioned in our publications, a spate of fresh regulation has been initiated within and beyond the G20 since the global financial crisis. The speed at which much of the regulation has been developed and implemented did, however, militate against taking the necessary steps to ensure that the rules which emerged catered for the needs of users of financial services. To ensure better regulation is developed in the future, TheCityUK proposes to make impact assessments, compliance cost assessments and cost-benefit analyses central to legislative and rule-making processes.
A regulatory scrutiny board: impact assessments
A number of institutional reforms would be required to make this happen at EU level, and more resources would be needed to improve the assessment of proposals during Level 1. One proposal recently made by First Vice-President of the European Commission, Timmermans, is to transform the current Impact Assessment Board (IAB) into a Regulatory Scrutiny Board (RSB). The RSB would be an independent body accountable to the Parliament that would serve all EU institutions and scrutinise the work of the Council and the Parliament. No legislation should be adopted without an impact assessment being published beforehand.
Focus on proportionality and subsidiarity
According to TheCityUK, impact assessments should be focused on the principles of proportionality and subsidiarity. The impact of regulation should be considered more strongly and unintended consequences should be minimised. In addition, a greater balance should be achieved between what is regulated at EU level and what is regulated by Member States, with the scope of EU regulation being confined to areas where Member States alone cannot act in any meaningful way to address issues.
TheCityUK also argues that, ex-post, the actual impact of each piece of legislation should be reviewed. Such mandatory post-implementation reviews would check whether regulation has achieved its desired result and, if not, how it should be recalibrated. Furthermore, post-implementation reviews should examine the individual costs associated with each piece of legislation alongside the cumulative cost of regulation, as it affects a particular sector rather than simply being assessed on a stand-alone basis.
The report by TheCityUK is worth considering as improvements in the way regulation is developed and adopted at EU level are warranted with parts of EU regulation falling short, for example, in terms of its proportionality. The report is may receive a good response in Europe as it fits in with its recently launched Better Regulation Package and a commitment to deliver better regulation in the coming years.