Requirements of category 2 regulators 15 Exercise of regulatory functions (1) A category 2 regulator must exercise its regulatory functions— (a) independently of its other functions or activities (if any), (b) properly in all respects (in particular, with a view to achieving public confidence). (2) The internal governance arrangements of a category 2 regulator must incorporate such provision as is necessary with a view to ensuring that the regulator— (a) always exercises its regulatory functions in accordance with subsection (1), (b) allocates sufficient resources (financial and otherwise) to the exercise of its regulatory functions, (c) regularly reviews how effectively it is exercising its regulatory functions (in particular, by reviewing the effectiveness of its regulatory scheme). 16 Annual reports of category 2 regulators (1) A category 2 regulator must prepare a report on the exercise of its regulatory functions as soon as practicable after the end of each reporting year. (2) The report must include— (a) information demonstrating how the regulator is complying with the regulatory objectives, (b) information as to how the regulator is carrying out its regulatory functions, (c) a statement on the regulator’s strategic priorities for the next reporting year in relation to its regulatory functions, (d) a summary of the costs incurred by the regulator in carrying out its regulatory functions, (da...