By Kirstin Ridley
LONDON (Reuters) – Britain’s government should set out what failures would be acceptable if regulations are eased in the push for economic growth, the bosses of the Financial Conduct Authority said on Wednesday.
Prime Minister Keir Starmer, under pressure to reignite the economy after years of sluggish output, has promised to scrap regulation that constrains growth and said last year he would review economic and competition regulators that did not take growth seriously.
Chief Executive Nikhil Rathi told a committee of lawmakers that Finance Minister Rachel Reeves was the first minister he had known to put in writing that she would stand behind the regulatory system even if cutting red tape led to failures.
But he told the House of Lords financial services regulation committee that the regulator needed an informed discussion about risk metrics.
“What are the metrics around tolerable failure? What does that look like in practice? And I think it’s a perfectly legitimate question to ask, because we do need to move forward … with a high degree of consensus around this,” added FCA Chair Ashley Alder.
Reeves ousted the chair of the Competition and Markets Authority Marcus Bokkerink on Tuesday on the grounds he failed to prioritise growth.
Only a day earlier, President Donald Trump returned to the White House, saying he would cut regulation on sectors including technology.
Reeves has already tasked the FCA and other regulators with outlining how they are creating a regulatory environment that boosts investment and innovation.
Alder told the committee proportionate regulation was key, but that there would be no return to the light regulation that preceded the 2008 financial crisis.
“Absolutely, we will embrace proportionality in the right places, but we’re not reverting to light touch,” he said.
Nina Moffatt, a fintech and regulation partner at law firm Paul Hastings, said the volume of rules was excessive and risked overwhelming the industry and regulator.
“There is a need to ensure that firms are well capitalised, protect customer funds and prevent fraud, but the government and FCA should be focussed on … areas of regulation which produce perverse consequences, impose excessive costs, and bear no benefit to consumers or to innovation,” she said.
Rathi’s five-year term at the FCA ends on Sept. 30. He has not been publicly drawn on whether he would seek a second term.
(Reporting by Kirstin Ridley; Editing by Alison Williams and Barbara Lewis)
