By William James and Tommy Reggiori Wilkes
LONDON (Reuters) – Britain’s finance watchdog said on Friday it would collaborate with the government on a new approach that supports economic growth, as it set out a series of proposals that included easing access to mortgages and reducing regulations.
“We want to collaborate with you in a fundamentally different way to support the growth mission,” Financial and Conduct Authority (FCA) Chief Executive Nikhil Rathi wrote in a letter sent to Prime Minister Keir Starmer and finance minister Rachel Reeves.
Reeves has urged Britain’s regulators to eliminate barriers to growth, tasking them with creating a regulatory environment that boosts investment and innovation.
She has also called on regulators to institute cultural change to deliver growth instead of focusing “excessively” on managing risk.
“To achieve the deep reforms necessary, your acceptance that we will take greater risks and rigorously prioritise resources is crucial,” Rathi said in the letter.
The FCA boss said that politicians, among others, needed to accept that more risk-taking would lead to more failures and that it could not “stop all harm” when making choices about which cases the regulator pursued.
Setting out its proposals for reform, Rathi said the FCA would aim to boost capital investment, speed up digital innovation and reduce the regulatory burden.
In the mortgage market, the regulator will begin “simplifying responsible lending and advice rules for mortgages, supporting home ownership and opening a discussion on the balance between access to lending and levels of defaults”.
More broadly, the regulator said it would assess the proportionality of reporting requirements for some firms.
“We could go even further and, with government support, reduce costs of anti-money laundering measures, relaxing ‘know your customer’ requirements on small transactions,” Rathi wrote.
Britain’s drive to reduce red tape comes amid expectations that the incoming Trump administration will slash or water down rules in the United States.
Bank of England Deputy Governor Sam Woods said this month that Britain should avoid participating in a “race to the bottom” on financial regulation.
The BoE said on Friday it would delay implementation of tougher global bank capital rules to 2027.
Among its proposed digital reforms, Rathi said the FCA was considering removing a 100-pound ($122) cap on payments with contactless cards, giving businesses and consumers more flexibility.
($1 = 0.8202 pounds)
