With the UK facing a prolonged period of considerable economic, social and political uncertainty as it negotiates its exit from the EU, regulators will increasingly find themselves playing an essential role in maintaining stability in their sector.
By its nature, regulation can be something of a reactive enterprise. It’s rightly constrained by government policy and legislation, with the speed of enacting regulatory objectives often hampered by extensive consultation, engagement and parliamentary support. Unsurprisingly then, the UK’s regulators have so far been mostly reactive in their response to Brexit. They’re quietly bracing themselves for the impact of potentially being called upon to dismantle a shared legislative and regulatory history spanning over 40 years.
At this stage, the extent to which the outcome of Brexit negotiations will require fundamental changes to the UK’s legal and regulatory landscape in the long term is anyone’s guess. As is the level of ensuing economic instability. But far from simply waiting to see what will happen, regulators need to be among the first to cross the Rubicon and prepare to actively support their markets through the uncertainties that lie ahead.
Brexit - the reality
How will you be affected?
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So what should you be doing to best protect the interests of industry and the public you serve?
- Fly the flag for Britain’s gold standard in regulation: the UK has an extensive track record of policy leadership and implementation excellence – within the EU and globally. Our regulators are among the most mature and progressive of their kind so don’t allow localised EU uncertainty to interrupt essential regulatory reforms. Reach out to international regulatory bodies now, and invest in developing deeper relationships for the long term. Consider the Civil Aviation Authority. It offers aviation consultancy globally – from training courses to setting up whole new regulators in countries wanting to adopt global minimum standards. Given many other UK regulators are similarly well-respected, they could consider doing the same.
- Be ready to act: you should anticipate being called upon, at short notice, for your expertise to consider the major implications of market scenarios. Having a go-to plan ready for how to respond, whilst maintaining business-as-usual project priorities and operational resilience, will be essential.
- Be brave and have an opinion: the UK’s regulators possess uniquely deep insights into their sectors, nationally and internationally. Prepare to go on-record as to what good looks like and set broad expectations of the road ahead. Long-term policy uncertainty creates risk and is damaging for markets. And whilst nothing can be guaranteed, informed public conjecture will help industry prepare to respond.
- Start to innovate: the UK’s future outside the EU will present some opportunities. Take a leaf out of the book of leading regulators, such as the Financial Conduct Authority, and bring together diverse groups of academics, industry experts and other representatives to create new ideas that will support your markets in staying competitive.
Delivering a stable and fair environment that anticipates and protects against risk is central to the role of the regulator. Strong leadership, particularly in the absence of the authority and certainty the sector normally enjoys, will serve to significantly lower the impact of the instability that awaits.