UK Regulation – devolution in Northern Ireland, Scotland and Wales
Legislative competence (law making power) in certain policy areas has been devolved to three legislatures created in 1998 for Northern Ireland, Scotland and Wales (each referred to as a ‘jurisdiction’).
The arrangements differ between these jurisdictions and are complex, but areas that have been devolved in all jurisdictions include, for instance, the environment and planning. Common interests such as defence and foreign policy have not been devolved. As a result, there are now four legislatures within the UK and regulation in one jurisdiction may differ from that in another and there may be different regulators for different jurisdictions.
This briefing applies only to regulation applying throughout the UK, or as applicable in England.
Impact of leaving the EU on UK Regulation
Before the UK left the EU and its regulations ceased to apply at the end of December 2020, EU Directives were implemented into UK domestic law and EU Regulations took direct effect in the UK. After 31 December 2020 EU law, as it stood at that date, was preserved, sometimes in amended form, as retained EU law. This was to ensure law and regulation that had become integral to the UK system was not removed without understanding and addressing any adverse consequences, a process that would have taken too long to accomplish before the end of 2020.
This retained law and regulation is now ‘UK’ law and regulation unless and until changed or repealed.
However, The Retained EU Law (Revocation and Reform) Bill was introduced to Parliament on 22nd September 2022. If enacted, all retained EU law will expire on 31 December 2023, save to the extent that a case has been made for its preservation (or for the expiry date for consideration to be extended).
UK regulation in a global context
As we live in a globally connected world, UK regulators cannot meet all their regulatory objectives in isolation, and UK regulation is both directly and indirectly impacted by regulatory initiatives elsewhere (and seeks to influence them). The following illustrations are by way of example only.
In order to promote consistency and efficiency for multi-national business, international rules or standards may be incorporated into UK regulation.
EXAMPLE: International Financial Reporting Standards (IFRS) are set by an international, private body, but are adopted in the UK by the UK Endorsement Board, set up under UK legislation. Certain companies are then required by legislation to comply with these adopted IFRS.
Standards of one jurisdiction may be recognised as being equivalent to standards of another for certain purposes to facilitate international trade or markets. For instance, the UK’s data protection regime has been recognised as 'essentially equivalent' with EU laws for the purposes of EU data protection law, which facilitates data flows between the EU and the UK.
Trade agreements between the UK and other jurisdictions may contain requirements regarding regulatory approaches (to prevent either party gaining what might be seen as an unfair competitive advantage). For instance, the UK-EU trade agreement includes agreed provisions on competition law regulation, state subsidy regulation, employment rights and environmental protection. As a treaty in international law, it cannot be directly enforced or relied on by businesses in the UK (unless relevant national law provides otherwise). For the most part, disputes between the UK and EU are to be referred to an independent arbitration tribunal for a binding ruling.
The UK government participates in numerous international bodies which seek to improve or standardise regulation through co-operation.
EXAMPLE: The Basel Committee on Banking Supervision describes itself as the primary global standard setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters. It does not possess any formal supra-national authority. Its decisions do not have legal force. Rather, it relies on its members' commitments (eg, to work together to promote financial stability and enhance their quality of banking regulation and supervision) to achieve its mandate. The UK’s Prudential Regulatory Authority is a member.
The regulatory approach in one country may impact other countries without any formal connection between them. For instance, one country may seek to shape its regulations to attract business or to protect its markets from competition, with resultant market impact on other countries.
