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The Financial Conduct Authority wants to be more helpful to consumers, tougher on criminals and more supportive of the City of London under a five-year strategy announced on Tuesday.
The regulator, which has in the past been criticised for stifling innovation and investment, committed to “deepen trust, rebalance risk, support growth and improve lives” with its new strategy, which received a cautious welcome from the City.
Nikhil Rathi, chief executive of the FCA, said its previous three-year strategy had “set high standards and bolstered our operational effectiveness” and it was now ready to go “much further, delivering at pace to meet the scale of change we are facing over the next five years”.
The regulator said it would make greater use of technology such as artificial intelligence to be “more efficient and effective”, while also helping consumers take better-informed risks with their savings and supporting economic growth by enabling investment and innovation.
Cracking down on financial crime and wrongdoing will also be an FCA priority to boost trust the City, it said, adding that would focus “on those who seek to use the fact they are regulated to do harm”.
Chris Hayward, policy chair at the City of London Corporation, said he supported “the FCA’s initiative to spark a vital debate on risk and growth appetite within the sector”.
In keeping with its commitment to support growth, the FCA said it would streamline its rules by “retiring” more than 100 pages of regulations covering consumer finance, investments and mortgage lending.
It is also withdrawing hundreds of supervisory publications and reviewing its “prescriptive disclosure rules” to give firms more flexibility in areas such as online transactions.
The simplification of the FCA’s rule book, which runs to more than 10,000 pages, comes after chancellor Rachel Reeves announced a “radical action plan to cut red tape” to lower the cost of regulation for business by a quarter.
The watchdog last year called for financial firms to suggest rules that could be scrapped because they overlapped with its new consumer duty regime, which requires companies to ensure their customers are treated fairly and receive “good outcomes”.
One area the FCA plans to review is its rule book for credit advertising, to examine whether lengthy terms and conditions are still needed. It will also look at whether businesses have to continue applying UK rules to overseas customers in areas such as insurance.
“Now the consumer duty is in full force, we’re making changes quickly where stakeholders want us to, to cut unnecessary costs, support growth, and ultimately help consumers get better outcomes,” said Sarah Pritchard, the FCA’s head of competition, consumers and international.
Some companies have complained that the consumer duty is too vague and they would prefer that the FCA keeps detailed rules to give them a better idea of exactly what activities are allowed.
The watchdog said it received “clear feedback from industry that now is not the time for widespread changes to its rules,” adding that it would “continue to engage with industry and others to get the balance right without a widespread overhaul”.
Supervisory publications that will be retired by the FCA under its new approach include “Dear CEO” letters to bosses in a certain sector, portfolio letters, and multi-firm and thematic reviews that predate its earlier three-year strategy launched in 2022.
Pritchard said: “These proposals are part of our long-term efforts to future-proof our rules, reduce burdens for financial firms and will help the ambitious government targets to cut the cost of regulation.”
