The Financial Conduct Authority (FCA) has launched a comprehensive review aimed at streamlining regulations to reduce burdens on businesses and foster economic growth. This initiative follows the recent introduction of the Consumer Duty, designed to ensure that businesses deliver positive outcomes for consumers purchasing financial products and services.
The FCA is calling on the financial industry to identify and highlight rules that could be simplified or eliminated if they overlap with the Consumer Duty. By reducing regulatory complexity, the FCA aims to lower operational costs for firms, encourage innovation, and support the risk appetite needed to drive growth, ultimately enhancing the UK’s international competitiveness and economic health over the long term.
Nikhil Rathi, Chief Executive of the FCA, emphasised the regulator’s commitment to economic growth, stating:
“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. We now want to seize the opportunity of the Duty and the move to a clear outcomes-based approach to streamline our rulebook, lowering costs for businesses and supporting the competitiveness and growth of the economy.”
In addition to the broad regulatory review, the FCA is specifically considering simplification of rules within the commercial insurance sector, a market valued at over £15.5 billion in the UK. The regulator is seeking feedback on whether re-categorising customers could significantly reduce the time required to onboard new clients or renew contracts, and facilitate the creation of customised products. Such changes could lower regulatory costs and enhance the competitiveness of the commercial insurance market.
The announcement of these reviews coincides with the publication of the FCA’s first report dedicated to its secondary objective: supporting UK competitiveness and economic growth over the medium to long term. The report highlights improvements in the FCA’s authorisation process, with 98% of cases now assessed within statutory deadlines, up from 78.9% in Q1 of 2022/23. Additionally, overseas wholesale financial firms looking to operate in the UK can now benefit from pre-application support from the FCA.
The FCA has also undertaken significant reforms to the listing rules, marking the most substantial changes in a generation. To further support innovation in financial markets, the FCA has established a permanent Digital Sandbox, providing a testing environment for firms at the early stages of product development.
Starting from 1st August, the FCA will consult a new independent panel of experts when preparing cost-benefit analyses for proposed regulations with an estimated net annual direct cost to the industry of £10 million per year or more.
This initiative underscores the FCA’s commitment to reducing regulatory burdens while promoting a robust and competitive financial services sector, poised for sustainable growth and enhanced global standing.
