Our approach to regulation

Our Regulatory Strategy can be downloaded below: 

  Regulatory Strategy: Our role and approach (April 2009)

We do not regard regulation as an end in itself. We believe in wealth creation. We believe that our role in promoting confidence in corporate reporting and governance, as part of a regulatory framework that promotes enterprise, investment and employment, can make the creation of wealth more likely.

We will use our influence and our powers to promote a regulatory regime in which high standards of corporate reporting and governance underpin the healthy functioning of markets to the benefit of business, investors, employees, and other interests, and enhance the UK’s economic strength in competitive international markets.

For public benefit entities, we believe in high standards of governance and stewardship and in the best use of resources. While we acknowledge that the responsibility for setting standards for public benefit entities often rests with the Government or other authorities, we believe that our role can make these outcomes more likely.

We are committed to the Better Regulation Commission principles of proportionality, targeting, consistency, transparency and accountability. We will:

• Work on the basis that a well-informed market is the best regulator but, in relation to some of our responsibilities, we have been given significant powers and we will not hesitate to use them where appropriate.
• Target the use of our powers, taking a proactive, risk-based and proportionate approach, making effective use of Impact Assessments and having particular regard to the impact of regulation on small enterprises.
• Emphasise principles and clarity in our standard-setting and rule-making and seek to ensure, as far as it is appropriate to do so, that we are consistent with international standards.
• Be consultative - involving preparers, auditors, users of corporate reports and other regulatory organisations in our decision-making and allowing adequate time for consultation, without compromising our independence or confidentiality.
• Recognise the importance of professional judgement in the way in which standards and rules are applied and enforced.
• Where we discharge a judicial or quasi-judicial function, do so in accordance with our own procedures and the rules of natural justice.
• Be transparent, accountable and efficient in our work, and ensure that it receives appropriate publicity.

We believe that companies, supported by their professional advisers and encouraged by the investor community, have the primary responsibility for achieving high standards of reporting and governance. An ethical approach to business should make the achievement of these standards more likely. We are very clear that no system of regulation can ever eliminate the possibility of corporate reporting or governance failures; we believe that it is impossible to achieve zero failure and any attempt to do so would destroy wealth rather than facilitate its creation. We can, however, influence the actions of those responsible for corporate reporting and governance.