Tuesday 15 March 2016

UK: 'Economics for Effective Regulation' - an FCA occasional paper

The Financial Conduct Authority has published an occasional paper titled 'Economics for Effective Regulation', setting out a methodology for regulatory economic analysis: see here (pdf). The FCA is beginning to use the methodology, with early trials underway in respect of its work on general insurance add-ons. The purpose of the methodology is to produce an assessment of market based problems, including information asymmetries, externalities, market power, and behavioural distortions; it also considers any unintended consequences of previous interventions that arose from market responses to changes in the regulatory environment.

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