On 17 March 2025, HM Treasury published a policy paper and a news story setting out a new approach to ensure regulators, and regulation, support growth.
HM Treasury says it will overhaul the regulatory system so that it:
– supports growth;
– is targeted and proportionate;
– is transparent and predictable; and
– adapts to keep pace with innovation.
HM Treasury says that its reforms “will apply to all bodies exercising regulatory powers and functions“. This will therefore include the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
The proposed actions are:
– action 1: tackling complexity and the burden of regulation (which includes consolidating the Payment Systems Regulator mainly within the FCA);
– action 2: reducing uncertainty across the regulatory system (HM Treasury will look 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; it will ensure the Financial Ombudsman Service is “set up in such a way that it works well for consumers, small businesses and for financial services firms” and reviewing some of the key criticisms of the Ombudsman); and
– action 3: challenging and shifting excessive risk aversion in the system (the review will hold regulators to account for their performance and reduce administrative costs; the aim is to strike the right balance between consumer protection and growth).
There are some key regulator pledges at Annex A. The FCA’s pledges, and the PRA’s pledges, are:
| FCA | Provide a dedicated case officer to every firm within the FCA’s regulatory sandbox. |
| FCA | Provide 50% more dedicated supervisors to early and high growth firms, to help them navigate the regulatory system and support their growth. |
| FCA | Extend pre-application support to all wholesale payments, and crypto firms. |
| FCA | Indicate more often that the FCA is ‘minded to approve’ start ups to help them secure funding. |
| FCA | Simplify its mortgage and advice rules to support greater home ownership. |
| FCA | Welcome FCA work to review the contactless payment limits, including removing the £100 limit on individual payments. |
| FCA | Accelerate a review of capital requirements for specialised trading firms. |
| FCA + PRA | HMT will review the FCA’s and PRA’s ‘have regards’ to rationalise them and ensure a focus on their priorities. |
| FCA + PRA | Reduce regulatory reporting requirements for firms. |
| PRA | The PRA will consult this April on a matching adjustment investment accelerator aimed at reducing the time between life insurers identifying a productive investment opportunity and making that investment. |
This announcement marks an important step forward in achieving a proportionate financial services regulatory system which works for both firms and for users of the services provided by firms. The devil is, of course, always in the detail and firms will no doubt be keeping a close eye on future annoucements.