On 27 September 2022, Sarah Pritchard, FCA Executive Director, Markets, gave a speech at the City and Finance Global’s ‘The future of the UK Financial Services Regulation’ Summit.
In her speech Ms Pritchard addresses how regulation can promote economic growth. Ms Pritchard addresses this endeavour by highlighting the following areas:
- Growth – The FCA recognises that they need to do more to speed up some of their decision making, as such they are focused on speeding up their approach to authorisations. Notably, the FCA has reduced the backlog for pending authorisations by 40 per cent in the last year, and they are trialling automated application forms for companies which are easier to understand and quicker for the FCA to access.
- Innovation: The FCA’s regulatory sandbox has helped more than 160 growing businesses to their offering, with over 90 per cent becoming authorised with the FCA’s help. The FCA aims to support 300 newly authorised businesses by next spring and are running webinars to support firms on key issues such financial promotions in the next few weeks. Furthermore, the FCA is seeking to use their testing approach to identify innovative solutions to reducing harm. The FCA aims to encourage a balanced approach of fostering innovation while offering consumers protection – helping the UK to remain the most attractive destination for fintech in Europe. Globally, second only to the United States.
- Being agile as the markets change – The FCA is building a regulatory approach that is agile and will respond to future changes and in recent years the reliance on a small number of third-party service providers has grown significantly. The government, in the current Financial Services and Markets Bill, intends to give the FCA, the Bank of England and PRA new powers to oversee the resilience of services that many financial services firms rely on from third parties. In July, the FCA published a joint discussion paper to seek views on this and the FCA is engaging firms and third parties as they develop these measures.
- Market integrity – The FCA continues to work closely with international partners within the Financial Stability Board and the International Organization of Securities Commissions to advance an internationally aligned approach to commodities regulation that recognises the globally inter-connected nature of these markets.
- Promoting effective competition – The FCA has a competition mandate and will act where it suspects that competition is not working well or where there are anti-competitive practices. The FCA has started a trade data review and has issued a request for data from trade data suppliers and users. The FCA will be expanding to broader ranges of wholesale data shortly and plans to launch a market study covering competition for benchmarks, credit ratings data and market data vendors in November.
- Regulatory change – Moving into the post-Brexit world, the FCA supports the government’s ambition under the Future Regulatory Framework Review to ensure that the FCA can tailor their rules to suit the markets. The FCA shares the government’s commitment to maintaining a coherent, agile and internationally respected approach to financial services regulation. As part of the Consumer Investment Strategy, the FCA wants to establish a simplified advice regime for mainstream stocks and shares ISAs where the risks to consumers are relatively low.
- Equity markets review – The FCA is consulting on changes to its rules concerning equity secondary markets. The FCA is aiming to remove some rules that create material operational or compliance costs on firms, but which do not deliver material benefits to end users or support market functioning.
- Primary and secondary markets – Over the summer, the FCA published a discussion paper on ways it might reform the listing regime to make it more effective for both issuers and investors. This followed changes the FCA made last year to allow dual class shares structures in the premium listing segment, reducing the level of shares in public hands required to list, and increasing the minimum market capitalisation threshold.
- Accountability and scrutiny – The FCA recognises the need to exercise their functions in a transparent and accountable way and are committed to doing so. The FCA’s current strategic objectives are to protect consumers, promote market integrity and promote competition in the interests of consumers. These objectives will broaden through legislation to include a secondary objective to promote international competitiveness and growth of the UK economy.