In the face of recession, FCA commits to reducing regulatory burdens

By Gaia Lamperti

Taking place at the America Square Conference Centre on 27th September 2022, ‘The Future of UK Financial Services Regulation’ Summit by City and Financial Global focused examined the evolution of financial services regulation in the UK.

The event did not only analyse the impact of macroeconomic changes, but also the implications of the many specific regulatory changes that, if introduced, will enhance the UK’s leading position in key sectors such as capital raising, crypto assets, ESG and stewardship, green finance, insurance, and FinTech.

“Technological and market structure changes mean that this perimeter has become more ambiguous, with some firms uncertain about the regulatory permissions they need. We hope that this draft guidance, which we are seeking industry views on, will give as much certainty as possible under the current legal framework,” Sarah Pritchard, Executive Director, Markets for the FCA, said at the event.

She also spoke about the importance of reducing the regulatory burden on businesses, to support innovation, agility and robustness in the face of a recession and other economic issues.

“By being focused on outcomes – rather than writing rules for every scenario – we can support new businesses and entrants to the market, as well as existing firms who are adapting their business models. Firms want to know what we want from them and what is needed. We aim to give that certainty and clarity.”

The FCA will aim to support 300 newly-authorised businesses by next spring and is running webinars to support firms as they tackle key issues. The other commitments made include speeding up some of its decision-making, particularly when it comes to authorisations.

The FCA will also provide more regulatory certainty, becoming a more outcome-focused regulator, as outlined in its recent three-year strategy. Pritchard also acknowledged this aspect in her speech, referencing the Regulatory Sandbox and the early and high-growth oversight approach that was announced earlier this year.

As we move forward in a post-Brexit world, the FCA will support the Government’s ambition, under the Future Regulatory Framework, to ensure that it can tailor rules to suit UK markets, creating a flexible, agile and effective regulatory landscape that can adapt to economic burdens and market change. Expert on regulatory issues, Henry Balani, Head of Industry and Regulatory Affairs at Encompass Corporation commented: “The UK is heading towards an economic recession, with the impact of the current climate already being widely felt across business operations. As we move forward, banks must maintain a level of continuity in the service that they provide in order to meet customer expectations. This means that keeping up with the ever-changing regulatory landscape could be considered an increasing burden on already stretched teams.”

“It is therefore encouraging to see the FCA committing to reforming its processes, specifically calling out its focus on supporting innovation and growth, and providing regulatory certainty by responding quickly to changes in markets. This will go a long way towards ensuring the landscape remains strong amidst the growing number of opportunistic financial criminals attempting to take advantage of overworked systems and processes,” Balani added.

“Now, more than ever, every organisation has a role to play in tackling the issue of financial crime by prioritising compliance. By adopting innovative RegTech solutions, financial institutions can guarantee continued compliance while speeding up their processes connected to AML and KYC and ultimately reducing the burden on people.”