Lords Financial Services Regulation Committee launches its first inquiry

This growth and competitiveness secondary objective was introduced following the passage of the Financial Services and Markets Act 2023.

The committee is seeking views on these new objectives and how they might impact financial service firms in the UK:

• What opportunities or changes should be prioritised in order for the regulators to meet their secondary growth and competitiveness objectives effectively?
• To what extent are the regulators focused on the objective to promote international competitiveness and growth? Are there areas where the ability of the regulators to fulfil their secondary objectives might be constrained by having to fulfil their primary objectives?
• What are some of the barriers in the current regulatory framework (including the role and responsibilities of other regulators and bodies such as the Payment Systems Regulator, The Pensions Regulator and the Financial Ombudsman Service) that could hinder efforts to drive economic growth and international competitiveness in (a) the UK economy and (b) the financial services sector?
• Do the regulators have the right capability and capacity to fulfil their regulatory objectives on growth and competitiveness? To what extent might the culture of the FCA and PRA influence their ability to fulfil their growth and competitiveness objectives?
• How effectively have the FCA and PRA consulted or engaged with industry in relation to the new secondary growth and competitiveness objective?
• In delivering their secondary objective on growth and competitiveness, what opportunities are there for the regulators to help to promote and support innovation in the financial services sector? How effective has the FCA’s regulatory sandbox been for supporting greater innovation in the financial services industry?
• How should the regulators ensure that any measures introduced to meet the secondary growth and competitiveness objectives work for businesses of all sizes across the sector, including startups, scaleups, and incumbents?
• Are there any additional metrics over and above those already agreed by the regulators that would better enable stakeholders to track progress and support scrutiny of their work against the secondary growth and competitiveness objective? How should a measure of growth be included in these metrics?
• Does the requirement within the secondary growth and competitiveness objectives to align with international standards create any constraints to fulfilling those objectives?
• Are the existing accountability measures around the secondary growth and competitiveness objective adequate?
• Are there examples of regulatory policies in other jurisdictions that should be considered by UK regulators to help facilitate the new secondary objective? What might the FCA and PRA be able to learn and apply from comparable supervisors in other markets in terms of applying secondary objectives on growth and competitiveness?

Commenting on the launch of the new inquiry, Lord Forsyth of Drumlean, Chair of the Financial Services Regulation Committee, said:

“Economic growth matters to everyone – individuals, businesses, and the government. It can help reduce poverty and improve people’s quality of life.

“The addition of the growth and competitiveness secondary objective has the potential to have a major impact on the UK’s financial services sector.

“Our committee wants to hear from you if you know about, or have a view on, how the introduction of this secondary objective is being implemented by the regulators and integrated with their other objectives, and what the implementation of those objectives could mean for the UK’s financial services sector.”

The deadline for the submission of written evidence is Thursday 11 July 2024.

Read the call for evidence and find out how to submit evidence.

More about the new Financial Services Regulation Committee

The Financial Services Regulation Committee was created in early 2024 following the passing of the Financial Services and Markets Act 2023 which repealed retained EU law for financial services and established a new framework for the regulation of financial services in the United Kingdom.

The committee is chaired by Lord Forsyth of Drumlean. Its members are: Baroness Bowles of Berkhamsted; Baroness Donaghy; Lord Eatwell; Lord Grabiner; Lord Hill of Oareford; Lord Hollick; Lord Kestenbaum; Lord Lilley; Baroness Noakes; Lord Sharkey; Lord Smith of Kelvin; and Lord Vaux of Harrowden.

Michael Raffan and William Wright have been appointed as the committee’s specialist advisers. Mr Raffan is a partner in Freshfields Bruckhaus Deringer LLP’s financial services practice, while Mr Wright is the founder and managing director of the think tank, New Financial.

The committee’s work can be followed on its website.