London, January 17 (Reuters) - The Financial Conduct Authority (FCA) in Britain advised the government on Friday to be prepared to "take greater risks" in order to boost economic growth. However, the FCA also cautioned that this approach could result in more failures and potential harm to consumers and businesses.
In a letter addressed to Prime Minister Keir Starmer and finance minister Rachel Reeves, FCA Chief Executive Nikhil Rathi expressed willingness to work together in support of the government's growth objectives. Proposed measures included facilitating mortgage access and easing regulations.
Reeves has encouraged regulators to streamline rules, with a focus on fostering investment and innovation. She emphasized the need for a shift in culture towards promoting growth over an excessive emphasis on risk management.
Rathi stressed the importance of embracing more risk to enact substantial reforms, recognizing that increased risk-taking might lead to failures. He highlighted the role of technology in making swift and informed decisions on pursuing cases and intelligence, suggesting that establishing metrics for acceptable failures could be beneficial.
The FCA's initiative to reduce bureaucratic hurdles aligns with the anticipation of potential regulatory changes under the new U.S. administration. Bank of England Deputy Governor Sam Woods cautioned against engaging in a race to relax financial regulations.
The FCA's strategy includes postponing the implementation of stricter global bank capital rules until 2027. Rathi outlined plans to drive capital investment, spur digital innovation, and ease regulatory obligations to bolster growth efforts.
Specifically in the mortgage sector, the FCA aims to simplify lending rules, promote homeownership, and evaluate the balance between lending accessibility and default rates. Additionally, the regulator intends to review the reporting requirements for certain firms, considering further reductions with government backing, particularly in anti-money laundering procedures.
Digital reforms may involve lifting the 100-pound ($122) limit on contactless card payments to provide more flexibility for businesses and consumers.