Financial regulator seeks to reduce burden on firms and support growth
The rules governing financial services in the UK could be streamlined to reduce burdens on businesses, following a review by the Financial Conduct Authority
The move to streamline financial services rules comes after the introduction in the UK of the Consumer Duty, which aims to ensure that businesses deliver good outcomes for consumers when they buy financial products and services. The regulator is calling on the industry to identify rules that could be removed or simplified if they overlap with the Duty.
The Financial Conduct Authority (FCA) believes that reducing the complexity of its rulebook could lower costs for firms, encourage innovation and help support the risk appetite needed to support growth, ultimately boosting international competitiveness and the economy over the long term.
Launching the review, Nikhil Rathi, Chief Executive of the FCA, said: “We are firmly committed to playing our part in supporting economic growth. The Consumer Duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first.”
Alongside the broad rule review, the FCA is considering simplifying rules in the commercial insurance sector, a market worth over £15.5 billion in the UK.
The regulator is inviting views on whether changing how customers are categorised could significantly reduce the time needed to take on new customers, or renew their contracts, and allow products to be custom made. This would reduce regulatory costs and may increase the competitiveness of the commercial insurance market.
Both reviews launched on the day the regulator published its first report into how it has taken forward its secondary objective to support UK competitiveness and economic growth over the medium to long term.
Recognising the vital role that the regulator plays in enabling new financial services firms to get off the ground, the FCA has improved its authorisation process, with 98% of cases now assessed within statutory deadlines, up from 78.9% in Q1 of 2022/23.
The FCA has also confirmed that from 1 August, it will consult a new independent panel of experts when preparing cost-benefit analyses. This applies to proposed regulations that have an estimated net annual direct cost to industry of £10 million per year and above.