On 13 June 2025, the House of Lords’ Financial Services Regulation Committee (the Committee) issued a report, Growing pains: clarity and culture change required – An examination of the secondary international competitiveness and growth objective.

Background

The Committee’s inquiry examined the progress made in driving the Prudential Regulation Authority and Financial Conduct Authority (FCA) to support growth, both in the financial services sector and, crucially, in the wider UK economy since the introduction of their secondary international competitiveness and growth objective by the Financial Services and Markets Act 2023.

Next steps

The Committee calls on the regulators to:

  • Drive cultural change throughout their organisations, introducing a more tailored and proportional approach to the risks posed by regulated firms, a culture of continual operational improvement and innovation, and a more transparent and trusting relationship with stakeholders.
  • Create a joint cost of compliance working group in conjunction with their respective Cost Benefit Analysis Panels and include an assessment of actual costs of large-scale regulatory reforms as part of their post-implementation reviews.
  • Clarify guidance on the implementation of the Consumer Duty and set out how the FCA and the FOS intend to address long-standing concerns with the redress framework.
  • Prioritise the delivery of the Advice Guidance Boundary Review to give UK consumers more support to save and invest.

The Committee calls on the Government to:

  • Undertake a focused assessment of the financial services landscape to identify where regulatory overlap can be eliminated.
  • Provide parameters and clear direction to the regulators on how it sees financial services regulation supporting its growth strategy.
  • Include outcomes-based secondary objective metrics that aim to illustrate the impact of the regulators’ action on the real economy and review the regulators’ statutory operating service metrics to ensure they are in line with comparative jurisdictions.
  • Commission an independent study to assess the cumulative cost of compliance in the financial services sector relative to other international jurisdictions and further academic research into how regulation can support growth.
  • Engage in concerted action to improve financial education from school age and up and work with the FCA, universities, and research organisations to develop new financial education programmes.

FCA statement

The FCA has issued a statement on its website stating that it is fully committed to supporting economic growth in the UK and a thriving financial services sector. It adds that it agrees that there is more to do to understand the role of regulation in unlocking growth in the wider economy and that is why it has commissioned research on this topic.