Businesses and experts urge city regulators to collaborate more cooperatively, fostering a more productive partnership.
City officials need to work more collaboratively with businesses to decrease regulatory burden, according to financial experts. The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) are often criticized for being unresponsive and vague in their communication with businesses, leading to unnecessary legal and consultancy fees.
One former regulator explained, "The authorization process [with regulators] takes ages. If I wanted a firm to do something, I wouldn't be very clear initially - I'd say it in a very wooly way. And then, when I was a consultant, I would get paid money to interpret a letter from the PRA because it was so unclear."
This roundtable discussion, hosted by workspace company Argyll, featured senior members of banks, insurance firms, economists, consumer groups, and regulatory experts. The discussion, held under Chatham House rules, focused on the government's regulatory action plan and whether it would be welcomed by the City.
The plan, which was published in March, aimed to make the UK's regulatory system more transparent, predictable, proportionate, and aligned with the government's growth mission. Some participants argued that the regulatory burden was hindering growth, while others believed that certain financial services firms were being overly cautious beyond the requirements of regulations.
One participant expressed that "regulation has shifted to being too heavily focused on consumer protection and risk aversion." This risk aversion, they argued, has led to a lack of risk-taking and ultimately stifled growth. However, an ex-regulator countered that "there are a few major economies that have tougher regulation on a number of fronts but continue to be more productive, more innovative."
Maintaining regulatory alignment with European peers was suggested as a solution to decreasing the regulatory burden for British financial services businesses. One participant pointed out that any material divergence with Europe would incur additional compliance costs.
Effective collaboration between city regulators and businesses requires strategic partnerships, open communication, and targeted regulatory reforms that reduce bureaucratic hurdles. This can be achieved through initiatives like the Cities Work Partnership, which brings together city officials, business leaders, and the Institute for Justice to identify and address specific regulatory challenges faced by small businesses. Other best practices include transparent and ongoing dialogue, data-driven regulatory reforms, and leveraging diversity and inclusion.
- The City's financial experts suggest a necessity for increased collaboration between city officials and businesses to address the regulatory burden that hinders growth.
- The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) have been criticized for their unresponsive and vague communication with businesses, leading to unnecessary expenses in legal and consultancy fees.
- The roundtable discussion focused on the government's regulatory action plan, with opinions divided: some participants argue that regulatory burden is hindering growth, while others believe that certain financial services firms are being overly cautious.
- Maintaining regulatory alignment with European peers is proposed as a potential solution to decrease the regulatory burden for British financial services businesses, to avoid additional compliance costs incurred due to any material divergence with Europe.
