Last week, the Industry and Regulators Committee of the House of Lords published a report entitled “Who watches the watchdogs?” As someone who has expressed his concern often and loudly under the heading “quis custodiet ipsos custodes” (who watches the watchers), this title gave me not a little hope for the recommendations of the Committee, as did the conclusion (in paragraph 163) that “it is therefore essential for the legitimacy of independent regulators that they are held to account for the use of this delegated power”.

Unfortunately, I am not convinced that the recommendations of the Committee delivered true checks and balances to the exercise of discretionary powers.

I do appreciate the recommendation that the Government should “create an independent statutory body analogous to the National Audit Office to advise and support Parliament and its select committees in holding regulators to account for their performance in a routine and systemic manner,” to glory under the moniker “Office for Regulatory Performance” (paragraph 222). I appreciate equally Charles Randell’s reference to Terry Pratchett (at paragraph 220) although this is tempered by what he said: he was “not convinced that balancing another turtle on the back of an enormous pile of turtles of accountability that the FCA already has would improve its performance”.

Those of us working to assist clients in their compliance with the Duty are aware that the supervision and enforcement of the application of the Duty is subject to regulatory guidance, interpretation and discretion.

My position always has been that, with the continued erosion in the powers to bring judicial review against decisions and the way in which the FCA’s own internal appeals/decision-making processes are structured, it is becoming more and more difficult for those subject to its supervisory and enforcement powers to challenge decisions made.

Over a number of posts and over a number of years, I have given examples of this in action. I will not scream further into the void here. It suffices to say that the remit of the Office for Regulatory Performance will not look at the issues about which I am concerned – it will look (I paraphrase) at the “value for money” provided by a regulator.

For example, at paragraph 280, the Citizens Advice representative praised the FCA’s new Consumer Duty as “path leading” and suggested there was “an awful lot of merit” in looking at similar duties in other sectors. Those of us working to assist clients in their compliance with the Duty are aware that the supervision and enforcement of the application of the Duty is subject to regulatory guidance, interpretation and discretion. Guidance, interpretation and discretion can be industry-wide, sector-specific or firm-specific and all will be subject to change periodically (at the FCA’s discretion).

That may seem churlish in light of paragraphs 268 and 269, which emphasize that “open and frank dialogue” between regulators and those they regulate is key and that regulators should seek feedback on their performance from those they regulate and publish that feedback.

Any firm that gives negative feedback on its regulator risks being labelled as being uncooperative with the regulator.

I stand by my point notwithstanding; any firm that gives negative feedback on its regulator (or seeks legal advice on challenging decisions) risks being labelled, as Therese Chambers said in inaugural speech as joint executive director of enforcement and market oversight at the FCA, as being uncooperative with the regulator.

To quote Chambers, lawyers “like to see themselves as risk managers … [but] should ask themselves, what poses the greatest risk in the long term”: full cooperation with the FCA come what may or the exercise of their legal and regulatory rights? Lawyers have “an opportunity to do the right thing” (ie recommend that their clients agree with the FCA’s position in all circumstances) but “often do not”.

Apart from the points mentioned above, what genuinely surprised me was that “there is currently no comprehensive list of the UK’s regulators, their responsibilities, and their oversight arrangements” (paragraph 172). Perhaps naively, I had assumed that someone in the Corridors of Power would be keeping score.

In no way whatsoever can, would or do I recommend not cooperating with a regulator – they are there for a reason, they do valuable work and those that seek to do business within the regulated perimeter choose to be subject to the rules. All I advocate is that there are checks and balances to the exercise of that supervisory and enforcement power.

Sam Tyfield is co-head of the Blockchain & Digital Assets at Shoosmiths. Sam’s background is in Corporate/M&A and he has been Chief Operating Officer and General Counsel of a high-frequency trading firm.

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