UK watchdog to slash financial regulation, support growth
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The news: The UK’s Financial Conduct Authority (FCA) has unveiled an ambitious five-year plan to be more helpful to consumers and better support the City of London.
The context: The financial watchdog has been weathering accusations of stifling innovation and investment with its overzealous regulatory obligations, and responded with a new bid to “deepen trust, rebalance risk, support growth and improve lives.”
The 2025-2030 strategy will see the FCA change its approach to supervision to become more efficient, including pursuing a “less intensive approach” to firms seeking to do the right thing, significantly streamlining how it sets its supervisory priorities, and reviewing whether it can stop requiring certain data returns.
The FCA said it will streamline its rules by scrapping over 100 pages of regulations covering consumer finance, investments and mortgage lending, and will withdraw hundreds of supervisory publications to give more flexibility to firms around areas like online transactions.
The watchdog which supervises approximately 42,000 firms, said it will also digitise authorisation processes to speed up applications and invest in technology to better serve the 100,000 cases it deals with annually.
The UK's Labour Government has said it will take action if regulators are found to be getting in the way of the country’s growth required to rebuild public finances, and has already made the move of disbanding the Payment Systems Regulator (currently being integrated to the FCA).
FCA chair Ashely Alder explained that the body will work to “shift our collective attitude” in the sector toward risk, as too often “the focus has been on the risks of a decision taken rather than the lost opportunity of taking none.”
A key focus of the FCA’s strategy is to crack down on financial crime, “focusing on those who seek to use the fact they are regulated to do harm”, and will aim to reduce the prevalence of authorised pash payment fraud cases and losses.
What they said: Nikhil Rathi, chief executive of the FCA, said: “Our last strategy set high standards and bolstered our operational effectiveness. We are committed to going much further, delivering at pace to meet the scale of change we are facing over the next 5 years. This strategy sets out our priorities, how we’ll become more efficient and effective and make the choices that shape the financial system”
The sources: FCA 5-year strategy, Financial Times
