PRA under pressure to cut red tape as growth plans fail to excite the City
The banking regulator is under pressure to go further and faster in its efforts to cut red tape from the City after it outlined plans to boost the growth of firms within its remit last week.
In a letter to the Prime Minister and Chancellor, the PRA, which sits within the Bank of England and has oversight of banks, insurers and building societies, revealed plans to launch a “concierge service” for foreign investors and streamline its process for drawing up new rules.
It also doubled down on plans to strip back reporting requirements and reduce overlaps in its rulebook. The measures come in response to a Christmas Eve request from the government to 17 regulators, asking them to outline proposals to boost growth.
However, the PRA’s plans failed to win round some lawyers and advisers in the City, who warned the changes may fail to meaningfully shift the dial.
“The PRA reiterated plans to simplify regulatory data and reporting for banks and to address potential overlaps with disclosure, a long-standing priority to reduce regulatory burdens. While these initiatives are generally welcomed, many were already anticipated and may have limited impact on competitiveness and growth,” said Eric Cloutier, group head of banking regulations at Forvis Mazars.
“In the coming months, the industry will be watching closely to see how activities develop in areas such as capital requirements, financial innovation, and cost of conduct issues.”
Robert Dedman, a partner at law firm CMS and former head of enforcement at the Bank of England, added that plans for a concierge service were “welcome” but more action was needed to ease the overlap of banking rules.
“Helping incoming firms navigate the system will only go so far if the level of regulatory overlap remains as it is,” he said. “The proposal to identify and address regulatory overlap is important and one that the government should consider carefully.”
Under chief executive Sam Woods, the PRA has been looking to strip back the regulatory burden on banks and insurers in line with its secondary growth and competitiveness mandate, introduced by the previous government.
The regulator has also delayed stringent new capital requirements for banks as it awaits clarity on whether the US will progress with the same plans under Donald Trump
Fears over the competitiveness of the UK’s banking sector have been thrown into sharp relief in recent days amid reports that Santander was considering ditching the UK, in part due to concerns over the rulebook for banks. However, it has since insisted it is staying in the country.
Harvey Knight, a regulatory partner at law firm Withers, said the exit of a UK lender would be no surprise as “regulators have continued to impose additional regulatory burdens on banks and on their senior bankers operating in the UK”.
PRA chief executive Sam Woods has looked to dismiss suggestions the regulator takes a tougher approach than its international peers, telling MPs las month it was “a highly contestable claim”.
A Bank of England spokesperson said: “Our regulation is designed, as directed by Parliament, to support stability in the UK financial sector, whilst also encouraging growth and competitiveness.”