The Government has today published an Action Plan to ensure regulations and regulators support growth. The follows feedback from the FLA and other industry representatives that the regulatory framework is a drag on investment.

Building on recent announcements to axe bodies including the Payments Regulator, the Government’s plan focuses on three areas:

  • Action 1 is to tackle the complexity and the burden of regulation. Core to this is a pledge to cut administrative burdens by a quarter by the end of this Parliament. As part of this exercise, several quangos will be culled and various environmental and planning rules and health and safety measures streamlined and/or reviewed.
  • Action 2 involves reducing uncertainty across the regulatory system. Within this is a commitment for HMT to review the number of the PRA’s and FCA’s “have regards” to identify opportunities to rationalise them and ensure a focus on their priorities. Here, the Government refers to the need to ensure that regulators within sectors align to deliver best outcomes:

 

“In financial services, for example, to ensure the sector remains world-leading our Financial Ombudsman Service (FOS) must be set up in such a way that it works well for consumers, small businesses and for financial services firms. Building on the announcements the Chancellor made at Mansion House, and steps to modernise the FCA’s rules for dispute resolution, the government will go further.  The Economic Secretary to the Treasury has been asked to examine whether the FOS, as it stands today, is delivering its role as a simple, impartial dispute resolution service which quickly and effectively deals with complaints against financial services firms and which works in concert with our Financial Conduct Authority which regulates the sector.  The Economic Secretary will focus, in particular, on a range of points that have been raised as part of our consultation on the growth and competitiveness strategy.  This will include addressing concerns around:

  • The framework in which the FOS operates which has resulted in it acting, at times, as a quasi-regulator.
  • Whether the FOS is applying today’s standards to actions that have taken place in the past.
  • The practices that have grown up over time on compensation.

 

This work is expected to conclude by the summer and the government stands ready to legislate in order to ensure that we have a dispute resolution system in the UK which is fit for a modern economy.”

The Government also pledges a package of measures to enable the FCA to support early-stage innovative firms to start conducting regulated activities.

  • Under Action 3, the Government will challenge and shift excessive risk aversion in the system. At the heart of this is a “pro-innovation regulatory approach to AI.” Every firm will have a dedicated FCA case officer within the FCA’s regulatory sandbox

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