Accountability of regulators Regulator engagement with HM Treasury, external stakeholders, and Parliament Engagement with stakeholders
It is vital that there are opportunities for consumers, relevant stakeholders and firms to engage with and scrutinise the development of regulatory proposals.
	Engagement with stakeholders is embedded in the regulators’ policymaking process through the application of statutory requirements and public law principles. The PRA and the FCA are subject to statutory requirements in FSMA 2000 which, in general, require them to consult with the public on draft rules. These PRA and FCA consultations are generally open for three months, though this can change depending on the issue. The PSR’s consultation obligations are largely derived from those of the FCA.
	As part of these consultation requirements, the regulators must explain why making the proposed rules advances, and is compatible with, their objectives as set by Parliament in legislation. The regulators must also explain how the proposals are compatible with their obligation to have regard to the regulatory principles. They must also produce a cost-benefit analysis (CBA) of the draft rules unless an exemption applies
	The government considers that this statutory general requirement for the regulators to consult on proposals remains fit for purpose and the key mechanism for stakeholder engagement.
	In addition to the duty to consult publicly on proposals, the FCA has a general duty to "make and maintain effective arrangements for consulting practitioners and consumers." The PRA has a similar general duty to "make and maintain effective arrangements for consulting PRA-authorised persons or, where appropriate, persons appearing to the PRA to represent the interests of such persons", on the extent to which the PRA’s general policies and practices are consistent with its general duties. The PSR has a similar general duty to "make and maintain effective arrangements for consulting relevant persons" on the extent to which its general policies and practices are consistent with its general duties, and how its payment systems objectives may best be achieved. As part of these duties, the regulators are required to maintain stakeholder panels.
	The regulators have regular meetings and discussions with the stakeholder panels, in which most major policy and regulatory proposals are presented for comment at an early stage. The panels’ contributions to policy development as part of this process are confidential to ensure both the regulator and panel members can share ideas and feedback openly. This confidentiality allows the regulators to engage the panels when policy is in the early stages of development ahead of public consultation. The panels publish annual reports on a voluntary basis, dealing with their work and their views on the regulators’ work.
	Greater rule-making responsibilities will increase the opportunities for the regulators to consult the panels from the outset of policy and regulatory development in more policy areas, which was not possible to the same extent while the UK was a member of the EU. The government and the regulators consider this will strengthen the panels’ important ability to provide stakeholder input into the development of policy and regulation.
	The government’s November 2021 consultation proposed a number of measures that seek to ensure that there is appropriate transparency of regulators’ operations for stakeholders to be confident in them; and that there is appropriate systematisation of important practices relating to the regulators’ statutory panels, the production of CBA, and the regulators’ review of rules. Respondents to the November 2021 consultation were broadly supportive of these proposals. These measures will apply to the PRA, the FCA and the PSR.