The nature of rules – how they have force
Rules come in different guises with varied terminology. For instance:
- Rules made by statute (also known as Acts of Parliament or primary legislation) are referred to as law.
- Secondary legislation is also referred to as law and is found in various forms including rules, orders and regulations and can be very significant (for example, an order specifies kinds of activities and investments that are regulated activity for the purposes of financial services regulation).
- Regulators may similarly issue 'rules' or 'regulations' or use other terminology such as code or guidance, if empowered (or required) to do so.
EXAMPLE: The Financial Service and Markets Act 2000 gives the FCA power to make rules applying to persons it authorises to carry out regulated activities. The rules made under this are contained in its handbook.
A key characteristic of a rule is that sanctions can be applied for breach of the rule. This gives rules force and distinguishes them from other types of stricture (however described, eg, as a code or guidance).
Provisions may be given force and in a variety of ways, for instance, by contract (eg, ICAEW’s members agree to be bound by its Code of Ethics) or through incorporation into law by reference (eg, legislation requires certain companies to comply with UK-endorsed International Financial Reporting Standards and sanctions apply for breach of the legislative requirements).
Another characteristic of a rule is that it must seek to influence behaviour, for instance by prohibiting or requiring certain activities. A body may have power to issue rules and sanctions may apply for breach of those rules but whether a provision made by it is a rule, as opposed to, for instance, mere information, depends on the nature of the provision. It may not always be easy to tell.
EXAMPLE: The 320-page Equality Act 2010 Code of Practice issued by the Equality and Human Rights Commission powers under the Equality Act 2006 is a statutory Code, approved by the Secretary of State and laid before Parliament. The main purpose of the Code is to provide a detailed explanation of the Act. However, it can be used in evidence in legal proceedings brought under the Act, and tribunals and courts must take into account any part of the Code that appears to them relevant to any questions arising in proceedings.
While a regulator cannot make rules without the power to do so, if it has powers of enforcement, then guidance or the like that it issues (eg, on its approach to enforcement) may nevertheless be akin to rule making.
Who makes the rules?
Parliament is the supreme law-making body in the UK and makes rules (statutes) itself as well as empowering others to do so.
Parliament frequently gives Government ministers (and through them, their departments) power to make rules through secondary legislation, for instance to deal with detailed matters relating to implementation of a statute or to change multiple pieces of secondary legislation (or, more controversially, even statute) for specified purposes. In practice, much more UK legislation is made by the government as secondary legislation than by Parliament as statute. Examples of other persons authorised by statute to make rules include the Financial Services Authority.
Decisions of UK courts may determine (as a matter of law) the meaning of rules made by others (including Parliament) or may themselves constitute law (common law) where there are no other rules.
EXAMPLE: In 2022 the Supreme Court determined that there is a common law rule that, for the purposes of a director's statutory duty to the company to act in good faith in its interests, those interests include, in certain circumstances, the interests of the company's creditors, which interests may at a certain point displace those of members.
There is a list of all government ministerial and non-ministerial departments, agencies and public bodies, high profile groups and public corporations available from the UK Government website, but it is not apparent from this alone which of the hundreds of bodies listed should be considered to be rule makers (or regulators more broadly). While there are numerous rule makers in the UK, we are not aware of a definitive list of all of them.
Rule-making processes
Parliament is supreme and, therefore, determines its own rule making processes. In practice, Parliament operates according to publicised and established practices and conventions which are described in the UK Parliament website.
These practices include how proposals for new laws are developed (including Green and White Papers), how bills are published and introduced into Parliament for debate before they become statutes, the role of the Crown and the relationship between Government and Parliament in the legislative process.
Where Parliament has authorised others, eg, Government ministers, to make rules, the relevant statute will specify any applicable procedures and constraints. Parliament’s website summarises how secondary legislation is made, including the various available processes for scrutiny by Parliament of Statutory Instruments (the main type of secondary legislation).
Statute may prescribe processes that rule-makers must follow. For instance, it may (or may not) require consultation before making rules.
EXAMPLE: The Legislative and Regulatory Reform Act requires the Minister to consult before introducing (or amending) the secondary legislation that sets the Regulators’ Code.
Rules of 'natural justice’ may also apply to rule making processes. For instance, if a regulator creates a legitimate expectation that it will consult before making rules but fails to do so, the validity of the rules may be challenged in court. However, government has stated that in the absence of a legal duty to consult, government departments should not carry out consultation for the sake of it.
Many regulators are required to have regard to the Principles of Good Regulation where applicable to their rule making processes, but this falls short of a requirement to follow the Principles (eg, to consult on all rule changes).
There are, therefore, mechanisms designed to instil discipline into the rule making process in the UK, but they are of limited scope and application.
Drafting of rules
It is self-evident that rules should be comprehensible to those to whom they apply and be communicated to them (even though ignorance of the law may be no defence for those breaching the rules).
This does not mean, however, that all regulation is in plain English or that most (let alone all) of the population could understand it if they tried.
In some cases, regulation is directed towards a narrow field of activity where the regulated persons are expected to have specialist knowledge and use of jargon or technical terms may be considered appropriate. For instance, accounting standards include provisions that many non-accountants would find challenging to explain.
Where breach of a rule may have significant consequences (eg, be a criminal offence) it is particularly important that the provision should neither be too narrow (leaving loopholes) nor too broad (inhibiting legitimate freedoms), which can be challenging and result in complex provisions.
Drafting of statutes is delegated to Parliamentary draftsmen, whose official guidance on drafting suggests that they should take the reader by the hand and tell readers 'the story you have to tell', but the readability of statutes is variable at best.
Other rule makers (including those making secondary legislation) are not subject to the same drafting disciplines so that a variety of drafting styles are encountered in UK regulation.
Public availability of rules
Most UK legislation is published on a searchable website and is available free of charge.
However, locating all legislation relevant to even a narrow area of regulation can be challenging. For instance, statutes on the website may not be annotated to refer to implementing secondary legislation so that searches may be required to identify it; and not all legislation is shown in its latest form so that it may be necessary to track successive changes (eg, the list of regulators within the scope of the Regulators’ Code has been amended periodically but the consolidated version is not published on the site).
As noted above, court cases form part of the UK’s body of rules. Leading judgments are generally available free of charge from the Government national archives case law site. The legislation site does not link to relevant court cases, and so it is necessary to know whether court cases may be relevant (or search).
Information available from regulators may provide a coherent view of relevant regulation, including applicable legislation and court cases. However, it is necessary first to know whether any given activity is regulated and by which regulator or regulators. This is not necessarily easy to do. For instance, employment is not subject to a single regulator. It is largely governed by contract (enforced through courts), but employers must comply with a huge volume of rules associated with employing anyone, including equality, health and safety at work, pensions, tax etc, each of which is a distinct field for regulation.
