Four ways for regulators to remain relevant
Four years ago, we asked if regulators were sitting too comfortably. As it turned out, we all were.
Of course, no one back then could have predicted the global turbulence wrought by COVID-19, a war in Europe and the largest squeeze in the cost of living in the UK for 50 years. At the same time public awareness and demand for action over climate change has continued to grow. While terms such as the ‘perma-crisis’ can seem alarmist, they reflect an understandable sense of unease. We all feel less safe.
Back then, our research concluded that regulators should take on a more purpose-based role focused on long-term industry well-being and public benefit. This meant having a strong voice and using it, developing new styles of leadership to drive innovation, collaborating rather than competing, and fixing internal fault lines.
Rising to the challenge
Many regulators have risen to the challenge of the last few years. The FCA had a strong voice and used it in the direction given to lenders to ensure consumers unable to keep up with payments were protected during the pandemic. We’ve seen regulators including the ICO and Ofcom establish new styles of leadership to drive innovation in the digital economy, making firms part of the solution in harnessing new technologies to protect users’ privacy and make them safer online. Twelve watchdogs and public bodies replaced competition with collaboration, working together to demystify the regulatory landscape for legal tech innovators, and convening a rapid regulatory response panel to help them navigate it. And we saw MHRA’s rapid acceleration of COVID-19 vaccine approval, where internal (and external) fault lines were not so much fixed but entirely redrawn to achieve something few would have thought possible.
For all these successes, most regulators recognise they need to do more to respond to an environment where the risks of harm to businesses and the public have increased, and to prepare for the next inevitable shock to the system. Through talking with our regulatory clients, we’ve identified four key challenges we believe all regulators will need to tackle to stay relevant, support their industries and keep people safe. Some of these were with us in 2018 but have intensified, while others are new.
- Protecting livelihoods – regulators have a pivotal role to play in protecting consumers and businesses from rising costs, as well as fostering functioning markets in the light of EU Exit and supporting the levelling up agenda.
- Adapting to rapid socio-political change – regulators must organise themselves to adapt to a political and social environment likely to create rapid shifts in priorities and demand. Particularly with government initiatives such as levelling up and likely changes to tax and spending brought in by a new PM. Recent events demonstrate that bureaucratic and inflexible ways of working will no longer suffice.
- Fighting climate change – societal focus on the climate crisis continues to intensify, prompting the UK Government’s 2050 net zero target. Regulators must do more to enable and potentially enforce this across industry.
- Keeping people safe from technological harms – the risks of social media are well known, and the proliferation of data across all industries has major implications for privacy and even for functioning democracy. At the same time, crime is increasingly digitised and cyber-attacks pose a threat to all levels of society, from individual consumers to critical national infrastructure. All regulators must consider where technological advances present new risks, and the powers and capabilities they need to tackle them.
With these challenges in mind, this year we’re once again exploring an in-depth study of how regulators are performing today and what they need to do differently. We’ll be supplementing our own insights, based on our experiences working with over 40 of the UK’s regulators to transform the way they work, with a quantitative cross-industry assessment.
The report will be released later this year. We’ve seen first-hand what the UK’s regulators have to offer – and how collaboration and sharing of knowledge and insight can bring ingenuity to life and build a positive human future.