Business bosses in London City have reacted positively to the FCA’s new five-year strategy and said the UK’s financial markets and systems must be prepared to take more risk in order to remain relevant and competitive on the global stage.
The reaction comes after the FCA on Tuesday announced the launch of a new five-year strategy “to deepen trust, rebalance risk, support growth and improve lives.” The new strategy has set out four priority objectives, and is aimed at changing the way the regulator works and supervises the UK’s financial system and market.
Chris Hayward, policy chair at the City of London Corporation, said he supported “the FCA’s initiative to spark a vital debate on risk and growth appetite within the sector. As we have consistently said, the UK must overcome its allergy to risk to boost the UK’s global competitiveness and ensure we remain the world’s leading financial hub.”
There was also a positive reaction from the Association of British Insurers (ABI), who said the strategy “sets a positive direction for the future of regulation.”
ABI director Hannah Gupta said: “We fully support its focus on encouraging growth through investment and innovation, and its intention to be a predictable, purposeful and proportionate regulator.”
Rob Mason, director of regulatory intelligence at Global Relay, told GRIP: “The ‘commitment to support economic growth and lightening the burden…’ is different from what we have seen previously.”
Other experts believe the FCA’s announcement “is welcome and is an antidote to the narrative that there is some magic wand solution towards deregulation.”
Jonathan Herbst, Global Head of Financial Services at Norton Rose Fulbright, told us: “The FCA’s message is a steady-as-she-goes reiteration of a proportionate and predictable approach. The message is that there will be change but it will be measured and not knee jerk.”
FCA position
Bosses at the FCA have understandably defended a shift in approach from protectionism and stringent regulation to a more relaxed attitude to risk taking.
Ashley Alder, Chair of the FCA, said: “Too often the focus has been on the risks of a decision taken rather than the lost opportunity of taking none. We want to change that so we can spur growth and improve lives.”
Nikhil Rathi, Chief Executive of the FCA, says the new four priorities reinforce each other and will help the regulator “become more efficient and effective and make the choices that shape the financial system.”
Sarah Pritchard, executive director at the FCA, was quoted saying: “Now the consumer duty is in full force, we’re making changes quickly where stakeholders want us to, to cut unnecessary costs, support growth, and ultimately help consumers get better outcomes.”
But the announcement is yet another sign of the fact that the regulator is in retreat and aligning itself with the government’s broader economic growth agenda, according to experts.
Over the past five months it has received constant pressure and criticism from the government and businesses for what they call unnecessary regulatory bureaucracy that prevents economic growth.
Senior ministers have also recently hinted at behind-the-scene discussions at reshaping the entire UK regulatory landscape and assessing both the needs and the performance of some of the country’s regulators.