City regulator the Financial Conduct Authority has outlined plans to reduce the time-cost burden on financial services companies as part of a series of reviews unveiled today.
In a statement issued today (July 29), chief executive Nikhil Rathi said the FCA was committed to looking at ways to streamline the financial regulatory regime in the UK, including simplifying rules in the commercial insurance sector and around financial services.
As reported by FT Adviser, many companies have felt the burden of regulation overwhelming in recent years.
The FCA will also be consulting with a new independent panel of experts when preparing cost benefit analyses, from August 1.
This will apply to proposed regulations which have an estimated net annual direct cost to industry of £10mn a year and above.
The announcement came as the FCA launched a review into ways to simplify its retail conduct rules and guidance.
In a Call For Input, the FCA wrote: "We particularly want to address potential areas of complexity, duplication, confusion, or over-prescription, which create regulatory costs with limited or no consumer benefit.
"We also want to include appropriate flexibility in our rules to be responsive to future changes and innovation."
The FCA is inviting financial services professionals to comment on various issues, including:
- Which detailed rules or guidance could be simplified to rely on high-level rules, or have interactions with other rules which could be clarified
- How any steps to simplify the FCA's rules and guidance affects its statutory objectives
- The appropriate balance between high-level and more detailed rules
- The potential benefits and costs from simplifying its rules.
The move comes after the introduction of the consumer duty in July 2023, which requires businesses to deliver the best outcomes for consumers when they buy financial products and services.
The regulator is also calling on financial services professionals to identify rules which could be removed or simplified if they overlap with the consumer duty.
Rathi said: “We are firmly committed to playing our part in supporting economic growth. The consumer duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first.
“We now want to seize the opportunity of the duty and the move to a clear outcomes-based approach to streamline our rulebook, lowering costs for businesses and supporting the competitiveness and growth of the economy.”
Report into UK competitiveness
Alongside the rule review announced today, the FCA is also considering simplifying rules in the commercial insurance sector, a market which it said was worth more than £15.5bn in the UK.
The FCA wants to know: "Whether changing how customers are categorised could significantly reduce the time needed to take on new customers, or renew their contracts, and allow products to be custom made.
"This would reduce regulatory costs and may increase the competitiveness of the commercial insurance market."
Also today (July 29), the regulator published its first report dedicated to how it has taken forward its secondary objective to support UK competitiveness and economic growth over the medium to long-term.
The 31-page report, seen by FT Adviser, said: "We are on track to locate around 10 per cent of our workforce outside London and the South East compared to 2.5 per cent 3 years ago."
