FCA sets out ‘encouraging’ plans to ease financial regulatory burden

Anthony Harrison and Jonathan Cavill, financial services experts at Pinsent Masons, were commenting following a speech from FCA chief executive Nikhil Rathi at a ‘roundtable’ hosted by the Association of British Insurers (ABI).

The speech, titled “The Gordian Knot of Growth”, tackled the challenges of fostering economic growth within the financial sector, highlighting the FCA’s commitment to bold regulatory reforms aimed at stimulating growth while maintaining robust consumer protection.

Harrison said: “While the speech is encouraging, how it plays in practice when there remains a significant flow of guidance, regulations and other consultations coming down the track remains to be seen. Complying with the current regulatory regime, which may also include addressing things like back-book issues and applying the consumer duty proactively, invariably leads to significant cost and time burdens. However, failing to comply could well come at an even higher cost, reputationally and financially, should the FCA take more robust interventions.”

The FCA has already embarked on several significant initiatives to promote growth. Rathi highlighted the recent overhaul of the UK’s listing rules as a prime example of the FCA’s proactive approach. These changes aim to make the UK a more attractive destination for companies seeking to go public, thereby boosting investment and economic activity. Another major reform is the regulator’s advice-guidance boundary review, which aims to simplify the regulatory framework governing financial advice. The FCA is aiming to make it easier for consumers to access high-quality financial advice while reducing complexity, ultimately aiming to foster greater financial inclusion and resilience.

The FCA chief also addressed concerns about the pace of regulatory change, acknowledging that while rapid reforms are needed, they must be balanced with the need for stability and predictability. The FCA has therefore decided to give firms flexibility to choose whether to appoint a consumer duty board champion, rather than mandating it.

Rathi further emphasised the importance of collaboration between regulators, the government, and industry stakeholders to achieve shared goals. The CEO called for “bold thinking” from all parties, with the authority currently seeking greater collaboration in the promotion of UK financial services on the international stage. The FCA is hoping greater collaboration will enhance the global competitiveness of the UK’s financial sector, in turn generating more investment and opportunities for growth.

Further proposed changes were also outlined during the speech in areas including mortgage affordability, digital payments, and the removal of redundant data returns in a bid to create a more dynamic and responsive regulatory environment. 

Cavill said: “The tone of this speech is encouraging, noting Mr Rathi’s emphasis on building trust and stability. It is fair to say that the FCA’s more contentious and litigious behaviours in the last five-year strategy cycle are starting to calm down, making way for a more constructive approach at a time when government expects regulators to promote economic growth and proportionate risk-taking.”