Britain's Financial Conduct Authority (FCA) will reassess its approach to financial firms' risk-taking in a bid to stimulate growth, as outlined in its new five-year strategy. The FCA's plan focuses on four primary areas: aiding consumers, combating crime, supporting growth, and functioning as a "smarter" regulator.
FCA Chair Ashley Alder emphasized the need to reevaluate the collective attitude towards risk, noting that the emphasis has often been on the risks of decision-making rather than the lost opportunities of inaction. The updated mission statement is likely to be welcomed by the Labour government, which is counting on accelerated growth in financial services to rejuvenate an economy where growth is projected to decline to about 1% in 2025.
While the FCA's strategy document provided limited specifics on changes to how it evaluates firms' risk-taking, it stated its intention to facilitate "less intensive supervision for those demonstrably seeking to do the right thing." As the FCA and the Prudential Regulation Authority also aim to enhance the competitiveness of the UK financial industry, they are under pressure to ease regulations for financial firms, which contribute approximately £110 billion in taxes annually, representing 12% of all UK tax receipts.
The FCA indicated that the industry has expressed clear feedback suggesting that now is not the time for extensive rule modifications. The regulator has committed to avoiding a "widespread overhaul" and will collaborate with the industry to find a suitable balance.
Additionally, the FCA is considering changes to disclosure rules regarding mortgages, lending, and savings products to provide consumers with clearer information. It also plans to retire hundreds of pages of outdated guidance and supervisory publications to streamline demands on financial firms, allowing product providers greater flexibility in tailoring communications to customers' needs and preferences. The regulator will also review parts of its credit advertising rules, including lengthy terms and conditions.