The rules governing financial services could be streamlined to reduce burdens on businesses, following a review launched by the Financial Conduct Authority (FCA) today.
The move comes after the introduction of the Consumer Duty, which makes sure that businesses deliver good outcomes for consumers when they buy financial products and services. The regulator is calling on industry to identify rules which could be removed or simplified if they overlap with the Duty.
Reducing complexity of the FCA’s rulebook could lower costs for firms, encourage innovation and help support the risk appetite needed to support growth, ultimately boosting international competitiveness and the economy over the long-term.
Launching the review, Nikhil Rathi, Chief Executive of the FCA said: “We are firmly committed to playing our part in supporting economic growth. The Consumer Duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first.
“We now want to seize the opportunity of the Duty and the move to a clear outcomes-based approach to streamline our rulebook, lowering costs for businesses and supporting the competitiveness and growth of the economy.”
Alongside the broad rule review announced today, the FCA is considering simplifying rules in the commercial insurance sector, a market worth over £15.5 billion in the UK.
The FCA is inviting views on whether changing how customers are categorised could significantly reduce the time needed to take on new customers, or renew their contracts, and allow products to be custom made. This would reduce regulatory costs and may increase the competitiveness of the commercial insurance market.
The launch of both reviews comes on the day the regulator publishes its first report dedicated to how it has taken forward its secondary objective to support UK competitiveness and economic growth over the medium to long-term.
Recognising the vital role that the regulator plays in enabling new financial services firms to get off the ground, the FCA has improved its authorisation process with 98% of cases now assessed within statutory deadlines, up from 78.9% in Q1 of 2022/23.
Overseas wholesale financial firms wishing to operate in the UK can benefit from pre-application support from the FCA. The regulator has also completed the biggest reform to the listing rules in a generation.
The FCA continues to support innovation in financial markets, including the creation of a permanent Digital Sandbox, a testing environment that supports firms at the early stage of product development.
Today, the FCA has also confirmed that from 1 August, it will consult a new independent panel of experts when preparing cost benefit analyses. This applies to proposed regulations which have an estimated net annual direct cost to industry of £10 million per year and above.
