The Financial Conduct Authority is seeking to ditch policy proposals and is committing to launch fewer “large-scale” initiatives over the next five years, as it steps up efforts to support Britain’s flagging economy.
The moves follow calls by Sir Keir Starmer’s government for regulators to cut the burden of bureaucracy, ahead of a speech next month in which the prime minister is expected to outline how rulemakers have been forced to pay more attention to their policies’ impact on growth.
The FCA’s board-level review has already identified one policy proposal to shelve — a plan to impose notice periods before investors can redeem money from property funds — and it is looking for others that could be reworked or ditched, according to senior officials.
“We have heard concerns about the pace of regulatory change in the context of supporting growth,” the FCA said in a statement.
“There will be fewer large-scale changes over the next five years,” it said. “We are also streamlining the policy pipeline, noting some measures to support growth require regulatory change and others are instigated by government and parliament.”
FCA chief executive Nikhil Rathi confirmed the moves in a speech on Thursday, saying: “We want to streamline our work. End duplication.”
He said the watchdog was also “looking to more quickly identify redundant data returns, consulting next month on the first batch that can be ‘turned off’”.
One example of a policy proposal that is being dropped is a requirement for property funds to have a notice period of between 90 and 180 days before investors can redeem their money, Rathi said.
The proposal was announced after several funds in the sector suspended withdrawals during the Covid-19 pandemic in 2020.
The FCA chief said this would be shelved in place of its plans to implement international standards from the Financial Stability Board and the International Organization of Securities Commissions on liquidity measures for open-ended funds.
As the government cracks down on watchdogs, the FCA has faced particular scrutiny over concerns that its approach to financial regulation is too heavy-handed.
The body, which supervises 58,000 financial services firms while seeking to protect consumers and foster competition, has been extremely active in producing new proposals as it uses its expanded post-Brexit powers to introduce rules that replace ones inherited from the EU.
The watchdog is due to announce 11 policy initiatives in the first quarter alone, ranging from changes in the consumer compensation framework to new rules on commercial insurance.
Last year it was forced to water down one of its most controversial proposals — to “name and shame” more of the companies it investigates — after uproar from ministers and City executives. However, officials said that while the FCA was reviewing feedback from its latest consultation on the plan, it was unlikely to be dropped.
The FCA is required to introduce some new rules that have been instigated by the government, such as plans to create a regulatory framework for companies handling crypto asset trading and services this year.
Chancellor Rachel Reeves has paved the way for a drastic regulatory overhaul by telling cabinet ministers to conduct a full audit of Britain’s estimated 130 regulators to examine if they are working to boost growth and whether any should be scrapped.
A Treasury spokesperson said: “We welcome the FCA’s work to streamline regulations,” adding that officials were “working with the regulators to deliver an ambitious action plan in the coming weeks to drive growth”.
Rathi, who joined the FCA in 2020 after running the London Stock Exchange, is the subject of intense speculation about whether he will continue in his job after his five-year term expires in September.
He applied last year for the vacant role of cabinet secretary, the most senior civil servant’s position, but did not make the shortlist. However, a senior FCA insider said he is well regarded by officials — including at the Treasury — and is likely to be asked to stay at the watchdog.
