The FCA has initiated a comprehensive review to simplify the regulatory framework governing the UK’s financial services.
This strategic move is set to reduce the operational burden on firms and enhance the UK’s position in the global market. The review responds to the newly implemented Consumer Duty, designed to improve consumer protection and necessitate that firms prioritize customer needs.
FCA Chief Executive Nikhil Rathi explained the motivation behind the review, stating, “We are firmly committed to playing our part in supporting economic growth. The Consumer Duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first. We now want to seize the opportunity of the Duty and the move to a clear outcomes-based approach to streamline our rulebook, lowering costs for businesses and supporting the competitiveness and growth of the economy.”
The FCA’s initiative also targets specific sectors for potential deregulation, including the commercial insurance sector, which is valued at over £15.5bn in the UK. The authority is considering simplifications that could decrease the time required to onboard new customers or renew contracts. This could lead to custom-made products and potentially increase the sector’s competitiveness by reducing regulatory costs.
In addition to these regulatory changes, the FCA has demonstrated significant improvements in its operations. The regulator now boasts a 98% success rate in assessing new financial services applications within statutory deadlines, a marked improvement from 78.9% in the first quarter of the previous year. This enhancement underscores the FCA’s dedication to fostering a conducive environment for new entrants in the financial services industry.
Moreover, the FCA is setting the stage for further innovations by establishing a permanent Digital Sandbox. This initiative supports firms in the early stages of product development, encouraging innovation within the sector. The regulator has also announced that from 1 August, it will consult an independent panel of experts when conducting cost-benefit analyses for regulations imposing a net annual direct cost to the industry of £10m and above.
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