UK chancellor urged not to get bogged down reviewing regulators

Chancellor of the Exchequer Rachel Reevesʼ audit of 130 UK watchdogs should not slow down regulatory reform, said industry experts yesterday. There is a worry that the review designed to cut red tape and boost growth could also delay moves to relax financial sector rules.

Though no timeline or remit has been given for the audit, first reported by the Financial Times, Etay Katz, financial regulatory partner at law firm Ashurst, expressed his concern. While commending the audit, he added: “What’s needed more urgently are concrete plans for immediate relaxation of regulations that impede growth most. The latter task is more focused and easier to achieve without primary legislative changes.”

In her Mansion House speech last November, Reeves said that reforms introduced after the 2008 global financial crisis had “gone too far”. Yesterday, a Treasury spokesperson said the ministry was working with regulators to understand how “reform across the board can kickstart economic growth”.  

“We are rebalancing our approach to regulation, maintaining high international standards and protecting consumers while taking forward reforms needed to support growth and investment, including to enable more informed and responsible risk-taking,” the spokesperson added.

Wholescale restructuring fear

Pressure has been mounting on financial regulators since the autumn to do more to boost growth, and not just from the Labour government. The House of Lords Financial Services Regulation Committee’s inquiry into the Prudential Regulation Authority (PRA) and the Financial Conduct Authority’s (FCA) secondary objective to enable growth of the UK economy has seen many industry suggestions for financial services rule changes, as well as calls for regulators to relax their attitude to risk.

But there is concern that momentum on reform could be lost if a wholesale restructuring of the UK’s regulators is now planned.

Simon Harrington, head of public policy at the Personal Investment Management & Financial Advice Association (PIMFA), said while it was “probably the case” that the UK had too many regulators, a “long-drawn-out” audit would just conclude that regulatory regimes should be consolidated.