UK Financial Regulation Stability and Growth Work for All Stakeholders

Speaking to the Treasury Select Committee, Helen Charlton, chair of the Financial Services Consumer Panel (FSCP), has warned MPs that making financial regulators prioritise economic growth poses a risk to consumers.

Her comments come after Chancellor Rachel Reeves vowed to cut financial red tape amid concerns that tighter rules established after the financial crisis to "eliminate risk" have “gone too far,” resulting in "unintended consequences" that stifle growth.

Ms Charlton told the Treasury Select Committee that the FSCP is “constantly” telling the Financial Conduct Authority (FCA) “to remember that consumer protection is a primary objective.” ?But is this the #FCA’s primary objective?

In short, it is not; it’s one of three operating objectives that fall under the FCA’s single strategic objective of “ensuring that relevant markets function well.” It is in this context that the Chancellor’s actions must be viewed.

Here are the FCA’s words on its objectives:

“We have a single strategic objective of ensuring that relevant markets function well. We have 3 operational objectives, which underpin our single strategic objective, and are given to us by the Financial Services and Markets Act 2000 (FSMA).

Our operational objectives, which are interconnected and contribute to protecting consumers from harm, are to:

• protect consumers – we secure an appropriate degree of protection for consumers
• protect financial markets – we protect and enhance the integrity of the UK financial system
• promote competition – we promote effective competition in the interests of consumers

We also have a secondary objective to facilitate the international competitiveness and growth of the UK economy.”

The FCA’s objectives are well crafted. They clearly emphasise the FCA’s remit and the importance of achieving balance and proportionality for all stakeholders.

The Chancellor’s remit letter, dated 14 November, reaffirmed these, emphasising stability and placing additional weight “to fully embed” the secondary international competitiveness and growth objective throughout the FCA. Personally, I see it as a timely “touch on the tiller” to ensure the regulator is getting the balance right.