The Financial Conduct Authority (FCA), the UK’s financial regulator, has outlined strategies to align financial regulations with the UK’s growth agenda in a letter to UK Prime Minister Keir Starmer and senior government officials.
Nikhil Rathi, chief executive, FCA, detailed plans to reduce regulatory burdens, enhance digital innovation, and accelerate reforms in key areas of financial services.
“I have appreciated your backing for our work on growth,” Rathi wrote, citing progress in reforming listing rules, bolstering investment research, revolutionising financial advice, and launching long-term asset funds. He also highlighted reforms to the value-for-money framework for pensions, changes to fixed income and commodity markets to maintain UK market leadership, and pro-competitiveness adjustments to the remuneration regime, including the removal of the bonus cap. Rathi added that record financial crime prosecutions contribute to growth by mitigating compensation levies and bolstering market integrity.
Rathi highlighted the need for reforms and emphasised that supporting growth will be a cornerstone of the FCA’s strategy through 2030. “To achieve the deep reforms necessary, your acceptance that we will take greater risks and rigorously prioritise resources is crucial,” Rathi wrote.
FCA publishes measures to boost growth of bond, derivates and asset management sectors
Key initiatives include streamlining regulations for asset managers, implementing a new prospectus regime, and accelerating reforms in wholesale markets to unlock capital and improve liquidity. The FCA will also launch a consolidated tape to enhance fixed-income data accessibility and ease retail access to corporate bonds.
Digital innovation is another priority, according to the letter. The FCA plans to progress a digital securities sandbox, improve governance in credit information, and introduce faster settlement times (T+1). New open banking payment methods and the use of data anticipated under the Data (use and access) Bill are expected to boost competition and benefit SMEs.
The FCA also aims to reduce “regulatory burden”. Planned changes include streamlining its handbook, reducing data reporting requirements, and modernising rules for mortgages and consumer credit. According to the FCA, further government support could help reduce costs associated with anti-money laundering measures and accelerate modernisation efforts.
One focus of the strategy is making it easier for firms to “start and grow”. The FCA highlighted plans to digitise authorisations, provide dedicated case officers for regulatory sandbox firms, and extend support to more early-stage and high-growth companies. It also proposed legislative changes to allow innovative start-ups to perform limited regulated activities under streamlined conditions.
As a part of the strategy to bolster the UK’s global presence, the FCA stated: “We recognise that major international investors want easier access to us and so we are establishing a presence in the United States. We will now go further and do this in Asia too.”
The FCA also acknowledged the risks of adopting a growth-focused approach. “We will not stop all harm when making risk-based choices about the cases and intelligence we pursue, and we increasingly deploy technology to make those choices with speed and at scale. Metrics for tolerable failures within the overall system could help to support this,” it stated.