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The UK’s Financial Conduct Authority (FCA) has unveiled plans to accelerate innovation, streamline regulations and support the financial services sector’s competitiveness.
“Growth will be a cornerstone of our strategy, through to 2030,” Nikhil Rathi, chief executive of the FCA, said in a new letter addressed to Prime Minister Keir Starmer and Chancellor Rachel Reeves.
In the letter, the FCA welcomed the government’s December 2024 growth recommendations and emphasised its willingness to collaborate on reforms, including in the areas of payments modernisation and open banking.
“We have listed ideas to test with you and through wider consultation, which we would do as quickly as possible, including with our statutory panels,” the letter reads.
“This will be supported by academic research we have commissioned to better understand the links between financial regulation and growth.”
As part of this effort to improve growth, the FCA has said that it will remove the £100 contactless payment limit to provide greater flexibility and level the playing field with digital wallets.
The regulator also made clear that advance work is underway on variable recurring payments, with the aim of “increasing competition and choice”, and that it aims to embrace open finance initiatives as well.
This includes leveraging powers from the anticipated Data (Use and Access) Bill, with a potential focus on supporting small and medium-sized enterprise (SME) lending.
Reducing regulatory burden
The FCA said that in its effort to reduce regulatory burdens, it is committed to streamlining its Handbook, incorporating industry input, and making it machine-readable to enhance accessibility and efficiency.
It has committed to working with the Bank of England and the Prudential Regulation Authority (PRA) to reduce reporting requirements for firms.
The regulator also plans to make the Senior Managers and Certification Regime more flexible, and will retire the Consumer Duty Board Champion requirement now that the duty has taken effect.
It will also ensure that future consultations on consumer protection “ask if the Consumer Duty is sufficient rather than new rules”.
Recommendations for government
The FCA used the letter to urge the government to advance digital identity solutions, improve the Companies House database, and digitise court systems to enable further innovation and efficiency.
The regulator also said that it “could go even further and, with government support, reduce costs of anti-money laundering measures, relaxing know your customer requirements on small transactions”.
It added that if modernisation of the Consumer Credit Act is accelerated, “we could reduce burdens further and faster”.
“I trust this letter underlines our continued strong commitment to support growth, alongside our primary objectives of consumer protection, market integrity and competition in the interests of consumers,” Rathi signed off the letter.
“We look forward to working with the government and partners to rapidly progress this work.”
