The government in London should clarify the acceptable level of failures if regulations are relaxed, as stated by the Financial Conduct Authority executives on Wednesday.
Under pressure to boost the economy, Prime Minister Keir Starmer has pledged to address restrictions hindering growth. Chief Executive Nikhil Rathi mentioned Finance Minister Rachel Reeves as the first minister committed to supporting the regulatory system even if reducing bureaucracy leads to failures.
However, Rathi emphasized the importance of discussing risk metrics within the regulatory framework. FCA Chair Ashley Alder stressed the necessity of defining "tolerable failure" and the practical implications, emphasizing the need for consensus in progressing.
Recent changes saw Reeves removing the Competition and Markets Authority chair due to a perceived lack of focus on growth. Alder highlighted the significance of proportionate regulation, aiming to avoid the lax oversight that preceded the 2008 financial crisis.
Amid concerns over excessive regulations stifling industry and regulators, Nina Moffatt from law firm Paul Hastings urged a focus on regulations that generate counterproductive outcomes. She emphasized the importance of ensuring adequate capitalization, protecting customer funds, and preventing fraud while streamlining regulations for more practical outcomes.
As Rathi's tenure at the FCA approaches its end, with a decision pending on seeking a second term, the discussion continues on fostering a regulatory environment supportive of investment and innovation.