Regulation doesn’t need to be heavy-handed or innovation-stifling. Instead, it can be open, collaborative, and community-enforced. We are seeking to place regulatory thinking within the broader "open" movement—open access, open-source, open standards—by championing voluntary standards markets and open, machine-readable regulation as credible alternatives to traditional, top-down models.
Unlike other industries—from maritime to food safety—financial services still lack vibrant community-driven standards ecosystems, which could otherwise foster trust, reduce compliance costs, and encourage responsible innovation. This initiative proposes practical tools for change: easily accessible regulatory documentation, real-time accreditation, competitive certification markets, and international cooperation.
Key benefits of open regulation include:
- Increased Transparency
- Stakeholder Engagement
- Adaptive Regulations
- Innovation Encouragement
- Better Compliance
- Cross-Sector Collaboration
- Empowerment of Marginalized Voices
We can achieve this by:
- Standards documents and guidance being publicly accessible, authoritatively and independently timestamped, and distributed freely.
- Facilitating third parties obtaining documents, processing them into machine-readable formats, and distributing them directly and through automated tools, such as AI.
- Plain English - The intended consumer of the rules is not a lawyer.
No disrespect to lawyers, but they are the only profession who could prepare a 10,000 word document and call it a “brief”.
The idea was launched at the City Banquet 2024 and draws on over a decade of Z/Yen-led work, including the following report, quite core to the subject:
"Backing Market Forces: How To Make Voluntary Standards Markets Work For Financial Services Regulation" (Michael Mainelli and Chiara von Gunten, Z/Yen Group Limited 2013 BSI, the Chartered Institute for Securities & Investment and Long Finance, (November 2013), 72 pages
The report advocates a ‘New Combined Approach’ to financial services regulation incorporating voluntary standards markets, i.e. accreditation/certification underpinned by a competitive markets approach. I’d suggest looking just after the halfway mark (pages 31-33) where you can see how ‘behind’ we are in financial services. While the report has gained some interesting media attention (see below), I do think that wider promotion will help us get the message out in regulatory discussions, bridging the unhelpful ‘totally regulated’ versus ‘completely free market’ divide:
For those who don’t want to read or skim 72 pages, we also published this short article: Michael Mainelli and Chiara von Gunten, "Backing Market Forces: Voluntary Standards Markets And The Regulation Of Financial Services", Securities and Investment Review, Securities & Investment Institute, November/December 2013, pages 22-23
We have done two further strands of work in more detail, (a) investment & asset management, and (b) insurance.
The following principles, while not official UKAS or ISO policy, represent a more assertive approach to best practice in standardisation and certification:
- there is an open standard available to all - many standards do not wholly fulfil this as they frequently charge significant fees for a copy of the standard, e.g. ISO affiliates such as the BSI typically charge three figures for short documents;
- certification agencies compete for audit business – thus encouraging rational interpretation(s) of the standard and controlling cost and quality via reputational risk and competition, and the system can prove exclusion, e.g. certifiers actually mark down organisations that fail to meet the standard;
- outputs such as certifications and grades awarded are published; ideally some benchmarking on the degree of pass or fail is given to participants;
- ideally the certifier bears some indemnity and that indemnity can, with the price paid by the buyer, be made publicly available;
- development of the standard is an open, structured, inclusive process involving interested stakeholders, conflicts of interest are eliminated and comparators available;
- there is an authorised, responsible accrediting body for certification agencies, e.g. the United Kingdom Accreditation Service (UKAS) or the Marine Stewardship Council in the case of sustainable fish, that helps to ensure proportionality and consistency; accreditors ensure the separation of standards development from the commercial elements of implementation and review; accreditors regulate the market;
- accreditors can sanction certifiers, for instance ensuring that certification is separate from improvement, e.g. there are no conflicts of interest where firms sell consultancy services to attain a standard alongside certification services;
- accreditation bodies are independent from commercial conformity assessment activities and, unless the system is seriously flawed, accreditation is probably best left to a sole entity, i.e. non-competitive.
The proposal now seeks support to:
- Build pilot “open regulation” portals and toolkits for financial services, insurance, and asset management
- Develop proof-of-concept machine-readable regulation and automated compliance tools
- Convene cross-sector working groups to modernise regulation using open standards
- Promote awareness, adoption, and experimentation via academic, policy, and business networks
The longer-term goal? A credible alternative to the binary “regulation vs free markets” narrative—a middle way built on accreditation, openness, and community enforcement.
For those who don’t want to read or skim 72 pages, we also published this short article: Michael Mainelli and Chiara von Gunten, "Backing Market Forces: Voluntary Standards Markets And The Regulation Of Financial Services", Securities and Investment Review, Securities & Investment Institute, November/December 2013, pages 22-23
We have done two further strands of work in more detail, (a) investment & asset management, and (b) insurance.
Of course as a non-executive director of the United Kingdom Accreditation Service – www.ukas.com – all this is of great interest to me. My key principles might interest you (not exactly UKAS or ISO policy, a little more assertive):
- there is an open standard available to all - many standards do not wholly fulfil this as they frequently charge significant fees for a copy of the standard, e.g. ISO affiliates such as the BSI typically charge three figures for short documents;
- certification agencies compete for audit business – thus encouraging rational interpretation(s) of the standard and controlling cost and quality via reputational risk and competition, and the system can prove exclusion, e.g. certifiers actually mark down organisations that fail to meet the standard;
- outputs such as certifications and grades awarded are published; ideally some benchmarking on the degree of pass or fail is given to participants;
- ideally the certifier bears some indemnity and that indemnity can, with the price paid by the buyer, be made publicly available;
- development of the standard is an open, structured, inclusive process involving interested stakeholders, conflicts of interest are eliminated and comparators available;
- there is an authorised, responsible accrediting body for certification agencies, e.g. the United Kingdom Accreditation Service or the Marine Stewardship Council in the case of sustainable fish, that helps to ensure proportionality and consistency; accreditors ensure the separation of standards development from the commercial elements of implementation and review; accreditors regulate the market;
- accreditors can sanction certifiers, for instance ensuring that certification is separate from improvement, e.g. there are no conflicts of interest where firms sell consultancy services to attain a standard alongside certification services;
- accreditation bodies are independent from commercial conformity assessment activities and, unless the system is seriously flawed, accreditation is probably best left to a sole entity, i.e. non-competitive.