Regulatory interpretation: a case study of the FSA policy of rule-use

Abstract

My doctoral thesis examines the policy of rule-use in the UK financial regulation. Its case study is the current FSA conduct of business regulation. It consists of two parts. Part I considers the evolution of the policy of rule-use during the past twenty years of financial regulation and up to the end of 2006. It argues that it has been transformed from a rule-centric regime into an interpretation centric-regime, where emphasis is placed on the interpretive project that makes possible the use of regulatory requirements rather than the production of selfcontained and static rules. Part II explores the grounds of this policy development by looking into the nature of regulatory interpretation. With this regard, it discusses two alternative theoretical accounts of regulatory interpretation: the communicative thesis, which emanates from Julia Black’s study of the use of rules in financial regulation under the Financial Services Act 1986; and the constructive thesis, which draws on Ronald Dworkin’s writings on the idea of law as integrity. The communicative thesis regards regulatory interpretation as a form of communication that is bound to fail and justifies the interpretationcentric approach as a tactic that aims to prevent or remedy failure of communication. The constructive thesis views regulatory interpretation as a dialectical practice that requires the participants of the wider regulatory community to work out the public standards (“principles”) that govern their interrelations and explains the interpretive shift in the policy of rule-use as an attempt to meet the demand for new and better interpretations. The thesis concludes that the constructive thesis is preferable, because it is better able to accommodate two fundamental intuitions about the practice of interpretation; the intuition that the 5 resolution of regulatory interpretive disputes must be the outcome of a genuine and reciprocal commitment to a public conception of justice and the intuition that scarce public resources should be wisely administered rather than wasted.