On 11 April 2017, the Financial Stability Board (FSB) published a consultation paper outlining the Proposed Framework for Post-Implementation Evaluation of the Effects of the G20 Financial Regulatory Reforms.
The framework will guide analyses of whether the G20 core financial reforms are achieving their intended outcomes and help to identify any material unintended consequences which may have to be addressed, without compromising on the objectives of the reforms.
Following the 2008 global financial crisis, the G20 launched a programme of comprehensive financial reforms intended to fortify the financial system’s resilience and aimed at reducing the likelihood and severity of financial crises. The reforms were also intended to serve the G20 objective of supporting strong, sustainable and balanced growth.
The FSB has coordinated the development of these reforms and supports their full, timely and consistent implementation. It reports annually on the Implementation and Effects of the G20 Financial Regulatory Reforms to G20 Leaders, the last report being in August 2016. In emphasising the role of regulatory reforms in ‘fixing the fault lines that led to the global financial crisis and build a safer, more resilient financial system’, the FSB informs policy discussions among members and standard-setting bodies.
The proposed post-implementation evaluation framework has been developed in collaboration with the standard-setting bodies and other stakeholders. The consultation covers processes and analytical approaches, scope, prioritisation of evaluations, measurement of benefits and costs of the reforms, and the mapping of objectives to intended outcomes, as well as the evaluation approaches and tools that could be used.
The analysis will be data-driven and will consider a wide range of interests. Evaluations will focus on assessing the social benefits and costs. They will consider private benefits and costs that accrue to particular market participants or end-users where these help to assess social benefits and costs.
The deadline for responses to the consultation is 11 May 2017 and the framework will be published before the G20 Leaders’ Summit in July, with the actual evaluations expected to take place over several years. It will be interesting to see how this consultation and the evaluations will be impacted by political events.
It follows on from a similar initiative instigated by the European Commission in September 2015, when a Call for Evidence was issued. The objective was to inform the Commission of the practical implications for the financial services sector of regulation which had been enacted in the preceding years – some 40 pieces of legislation have been adopted since 2009. The Commission wanted to gauge whether these had given rise to regulatory burdens or unintended consequences.
The consultation received hundreds of responses from stakeholders. The overall conclusion was that the financial services framework does not need to be changed, in that the rules have enhanced the resilience of the financial system and improved protections for investors and consumers. However, stakeholders also identified examples of possible overlap and other forms of unintended interaction between different rules, which highlights the importance of considering and analysing the combined impact of rules.
To address this point the Commission intends to put targeted follow-up action in place in the following areas: