The Financial Conduct Authority (FCA) has detailed plans to reform regulatory practices to support economic growth in the UK, via a letter from chief executive Nikhil Rathi addressed to the government.
The FCA’s approach includes embracing digital innovation, reducing regulatory burdens, and enabling capital investment while maintaining its primary objectives of consumer protection, market integrity, and competition, it suggested.
The FCA aims to facilitate capital investment through reforms in wholesale markets, including a new prospectus regime and simplified access to corporate bonds for retail investors. Plans include easing regulatory requirements for asset managers and insurers and accelerating a review of capital requirements for specialised trading firms.
To enhance productivity, the FCA proposes a comprehensive digital infrastructure plan in alignment with the government’s AI initiatives. It also highlights the need to adopt faster securities settlement processes, develop open banking payment methods, and leverage data-driven advancements such as a digital securities sandbox and improved pension transfer tools.
The FCA intends to remove outdated rules, simplify reporting requirements, and improve the accessibility of its handbook. Proposed measures include making the Senior Managers and Certification Regime more flexible and revising responsible lending rules to support homeownership. The FCA also plans to streamline authorisation processes for startups and reduce the regulatory burden for smaller firms.
To boost exports and inward investment, the FCA is expanding its international presence with offices in the United States and Asia. The regulator also aims to enhance predictability and confidence in the regulatory environment by refining redress frameworks and coordinating with the Financial Ombudsman Service.
In his letter, Rathi emphasised the importance of a balanced approach to risk management, stating: “Enabling more informed risk-taking requires enduring acceptance… that we need to prioritise resources and that there will be failures. This acceptance needs to be shared across all our accountability mechanisms, including in Parliament.”
Based in London, the FCA regulates financial firms in the UK. It works alongside the Prudential Regulation Authority and the Financial Policy Committee to set regulatory requirements for the financial sector.
The letter, the regulator stated, signals its commitment to fostering growth while ensuring consumer protection and market stability. The outlined reforms are expected to pave the way for a more competitive financial services sector.