Ministers to be handed ‘statutory powers’ to steer regulator’s growth agenda
Ministers will be handed new “statutory powers” to steer UK watchdog’s growth agenda and define what it means in different “regulatory contexts“.
In the King’s Speech, the government revealed its Regulating for Growth Bill – a cross-sector piece of legislation designed to beef up the UK’s regulatory system’s fostering of growth.
The government’s report takes aim at the “lack of agility and responsiveness to innovation and change in our regulatory system” and adds it is “undermining” the UK’s competitive edge.
It intends to hit “a list of leading regulators” – with Natural England, the Environment Agency and Health and Safety Executive cited as examples – with a “clear, statutory mandate to prioritise growth without undermining their important core function”.
This will be backed up with a new “statutory power” for ministers to give regulators strategic steers, allowing the government to “define what growth means in different regulatory contexts”.
It follows a report from the House of Lords, published today, which states it is currently unclear what “supporting growth” means for individual regulators with diverse responsibilities.
The House of Lords Industry and Regulators Committee called for “sponsoring departments” to provide specific guidance on how growth fits alongside primary duties like safety or environmental protection.
“The King’s Speech provisions on financial services are hardly new since each of these reforms is already underway,” said Simon Morris, financial services Partner at law firm CMS.
“All will contribute to the Regulation for Growth agenda as they are sure to make some efficiency gains. But in regulation what matters is not just what you do, the way that you do it matters too. The regulators must embrace a ‘can do’ attitude to attain the target of a Britain open for business. This means efficient not lax regulation and needs more than a new statute to achieve.”
Banks get a win in ring-fencing reform
The financial services sector was also targeted for growth reforms in the King’s Speech – an area the Treasury has previously come into friction with watchdogs.
Last year, Rachel Reeves attempted to convene a meeting between banking watchdog officials and fintech giant Revolut as the firm sought to clinch its full-fat UK licence. But this was reportedly blocked by Bank of England governor Andrew Bailey over concerns of political interference in regulation.
The Treasury has made another play to shift from the regulatory overhang after 2008, with the Enhancing Financial Services Bill also in the King’s Speech.
After nearly a year of lobbying, the government has confirmed it will update the ring-fencing regime that separates retail banking activities from investment.
Top lenders have waded in on the regulatory regime, and branded the 15-year-old legislation “redundant”
The government framed the move as helping to unlock more access to finance for small businesses and bolster the SME lending landscape.
Elsewhere in the bill, it builds on previous consultations with plans to streamline the complaint system for the Financial Ombudsman in a bid to curb quasi-regulator accusations. It sees the consolidation of the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA), which was announced last year.
It also seeks to aggressively scale back the Senior Managers and Certification Regime through removing direct regulatory vetting for approximately 50 per cent of mid-to-senior roles.