Inconsistent rules, a lack of co-ordination across regulators and the unnecessarily high volume of regulation and related materials are among the concerns highlighted by members and flagged up by ICAEW in its response to a Call for Evidence on the regulatory landscape. 

The Department of Business and Trade’s call for “real world” evidence of what is good or bad about the UK’s regulatory regime stimulated significant feedback from more than 100 ICAEW members – both directly and through engagement with ICAEW’s expert committees and boards. The largely critical nature of the comments demonstrates a need for reform and improvement, ICAEW says.

Smarter Regulation objectives

Although regulation is essential to reduce harm, promote quality and economic growth, and instil trust in markets and business affairs, poor regulation can be counterproductive. ICAEW says it broadly agrees with the objectives of the government’s Smarter Regulation programme of regulatory reform. Smarter regulation is about only using regulation where necessary, implementing it well, and ensuring its use is proportionate and future-proof, the government says.

In October last year, the government announced an in-depth review into most regulators across the country, with the aim of ensuring they are working efficiently and delivering on reforms needed to help grow the economy and protect consumers. There are around 90 regulators in the UK covering most sectors between them, costing around £5bn a year. According to the review, 39% of small businesses say red tape holds them back. 

Charles Worth, ICAEW’s Head of Business Law, says: “What particularly struck home was how corrosive the cumulative impact of regulation can be when it is poorly thought out or implemented, especially when there are overlapping areas with little co-ordination between the regulators. 

“For some, the complexity and difficulties represent a business opportunity, but for others it is an unwelcome burden, sometimes even causing members to cease practice altogether. Few would argue that the shortcomings are good for the UK economy and wider society.”

Recommendations

Among the recommendations being put forward, ICAEW says steps should be taken to help Parliament scrutinise the effectiveness of the regime in order to better control it. ICAEW believes the recent announcement that a new cross-party committee will be established in the House of Lords to scrutinise UK financial regulators is an encouraging sign that the need for change is recognised.

Meanwhile, the regulatory regime could be materially improved if key principles common to most UK regulators were developed and applied consistently, ICAEW believes. “The Principles of Good Regulation and Regulators’ Code continue to provide a foundation for the sort of principles we have in mind,” ICAEW says in its response. 

“However, government should consult on updating them to reflect the experience of stakeholders; they should also be applied more robustly and visibly across the regime, and mechanisms to assess whether the principles are being adhered to by regulators need to be strengthened."

Although improving the UK’s regulatory regime will not be quick or easy, it is by no means a hopeless task, Worth says. “That is why we continue to contribute to the ongoing effort through our better regulation initiative. We are always happy to hear from members with examples of their experiences and suggestions for change.”

• Read ICAEW’s response to the government’s Call for Evidence on Smarter Regulation in full.

• Find out more about ICAEW’s Better Regulation project via our Better Regulation hub.