Treasury Select Committee chair Mel Stride has told Mortgage Strategy sister magazine Money Marketing it is “not immediately clear” how merging the different UK regulatory bodies will produce results.
The Financial Times recently reported that Conservative leadership contender Liz Truss has considered the fusion of different UK regulatory bodies.
As such, the Financial Conduct Authority, the Prudential Regulation Authority and the Payment Systems Regulator would merge together to create a “mega regulator”.
This report was based on inside sources from Truss’s leadership campaign.
Yet Stride expressed reservations about the idea.
He said: “It is not immediately clear how merging the UK’s regulators will produce results, not least because the FCA is in the middle of a major transformation programme at a time of considerable economic uncertainty.
“I think we need to be very careful not to return to the regulatory model in operation during the financial crisis, which is widely recognised as having been ineffective.”
The FCA declined to comment on its potential merger with the other regulatory bodies.
AJ Bell head of retirement policy Tom Selby stressed that the three regulators play different roles in the UK regulatory system.
“It will be important any merger maintains the key protections each individual regulator is currently responsible for,” he said.
“The former city regulator, the Financial Services Authority, was carved up in the aftermath of the financial crisis.
“Reversing that move to bring regulatory powers under one roof again would be a major undertaking.”
He added that there is a stronger case for “folding at least some of the responsibilities” of The Pensions Regulator in to the FCA.
He said: “While TPR and the FCA often work together, they continue to set rules independently.
“Having two regulators for what is essentially the same product carries the constant risk of inefficiency, with rules either duplicated or applied in different ways.
“This can also lead to wasted resources and confusion, particularly for businesses which operate in both the trust and contract-based pensions worlds.
“At the very least, a review of whether TPR’s regulation of trust-based defined contribution (DC) schemes could be carried out more effectively by the FCA would seem to have some merit.”
The FCA launched its transformation programme in July 2021. It aims to make of the regulator a “more innovative, more assertive, more adaptive” organisation.
As part of the programme, the FCA also wants to measure its success by being clearer on what outcomes matter and what metrics it uses to measure them.
The new UK prime minister will be announced on 5 September. According to YouGov, Liz Truss leads her opponent Rishi Sunak by 66% to 34%.
