The Chancellor has told the Financial Conduct Authority it needs to “build more momentum” to free up regulation to allow financial firms to push for growth.
In a letter to the regulator, dated 14 November, she writes that it “should also consider how you can enable informed and responsible risk-taking by authorised firms and customers,” adding that despite moves to free up red tape “there is more to do to build momentum”.
Reeves points out: “It is vital that you continue to fully embed the secondary international competitiveness and growth objective throughout your organisation, accelerating its adoption so that growth and competitiveness are appropriately considered across all of your policymaking, and in your approach to supervision and the experience of firms in their interactions with the Financial Conduct Authority.”
She adds that the watchdog “should also consider how you can enable informed and responsible risk-taking by authorised firms and customers”.
The Chancellor writes: “I recognise that there are difficult trade-offs to make, and I commit to the government supporting you in this.
“Ultimately, we must trust in the systems that we have put in place to manage the impact when things do go wrong — so that problems with one firm don’t create wider risks, or lead to an over-correction in future.”
The Chancellor says the regulator should ensure:
- Innovative new firms are supported to enter the market, and existing firms are enabled to innovate and invest in new technologies
- Customers can access appropriate advice and products that will allow them to benefit from economic growth
- UK financial services firms are supported to play a significant role in supporting the Net Zero transition
- Firms have a positive experience of engaging with the FCA
- The UK demonstrates international leadership on key regulatory issues
Reeves adds that the watchdog should “support home ownership to enable individuals to access the financial services and products they need to fully participate in the economy, including the government’s commitment to making homeownership more accessible by fixing the planning system and building 1.5 million more homes, and supporting first-time buyers who struggle to save for a large deposit”.
The Financial Conduct Authority has responded by saying it is “a partner for growth and we support the Chancellor’s vision for achieving it”.
It adds that in recent months it has reformed UK listing rules “to encourage a wide range of companies to list and raise capital in the UK”.
It is working on the Pisces platform that will allow private companies to trade securities.
And it has allowed asset managers greater freedom in how they pay for research and has clarified conduct and distribution services rules for UK and international insurance brokers.
The regulator adds: “We have fully embraced our secondary international competitiveness and growth objective, embedding it into our processes, policymaking and culture.
“We’ve established a dedicated team to advise on implementing the new objective and our policy work now clearly articulates how we have applied the objective.”
The Financial Conduct Authority and the City have currently locked horns over the regulator’s controversial plans to name companies it has under investigation.
Financial firms have fiercely opposed this since it was proposed in February, saying it would damage the reputation and valuations of firms ahead of any ruling.
The City appealed over the watchdog’s head to the previous Chancellor Jeremy Hunt asking him to scrap the plans in April.
These revised plans look set to be the first test of the new relationship between the Chancellor, regulators and the City.
