The Financial Conduct Authority (FCA) has recently made an announcement regarding its plans to reduce red tape and streamline regulations in the financial services industry. This decision comes after the FCA realized that its consumer duty rules were overlapping with existing regulations, causing unnecessary burdens on companies.
Last year, the FCA introduced consumer guardrails that required City firms to make significant operational changes to comply with the duty. While some companies found this to be a challenging task, others like FTSE 100 asset manager Schroders, saw it as a positive shift despite the extensive work involved.
In response to these concerns, the FCA has initiated a review of financial service rules with the goal of identifying and removing any regulations that overlap with the consumer duty. FCA chief Nikhil Rathi emphasized the importance of setting higher standards of consumer protection while also supporting the growth and competitiveness of the economy.
The regulator’s new secondary objective, mandated by the government, requires the FCA to consider the UK economy’s growth and the competitiveness of the financial services sector. However, some critics have raised questions about the FCA’s plans to name and shame firms under investigation, arguing that it conflicts with its secondary objective.
Despite these criticisms, the FCA defended its record on the secondary objective, highlighting its efforts to streamline processes and policy-making to support business growth. Additionally, the FCA is looking into simplifying regulations in the commercial insurance sector, aiming to reduce costs and enhance market competitiveness.
Overall, the FCA’s decision to review and streamline regulations reflects a commitment to balancing consumer protection with economic growth. By identifying and removing overlapping rules, the FCA aims to create a more efficient regulatory environment that benefits both businesses and consumers.
