City at risk of ‘policy overload’ as government pushes through reforms says FCA chair
City firms are facing the risk of “policy overload” as the government pushes through a slew of reforms to the rules governing the financial services sector, the chair of the Financial Conduct Authority (FCA) warned today.
Speaking with the Treasury Select Committee, FCA chair Ashley Alder said that feedback from the industry suggested the volume of regulatory and legislative change could potentially overwhelm firms as ministers press on with plans to overhaul City rules.
“We have a great deal of engagement with a range of stakeholders from firms to consumer groups, and the clear message that we’re getting from those […], is that there is from their perspective always a risk of policy overload, both in terms of the pace of change, but also implementation timetables,” Alder said.
Alder insisted the regulator was moving at an “appropriate pace” but was working with the Treasury to “sequence and prioritise appropriately” to cope with the rush of reform.
The warning comes as the government has looked to slash red tape and repeal EU-era rules in a bid to boost the growth of the City this year.
Last December, Chancellor Jeremy Hunt laid out the Edinburgh Reforms to create specific rules for the UK’s financial services sector, including tailoring the solvency regime for insurers and introducing a growth and competitiveness objective for regulators.
The FCA has also introduced beefed-up consumer rules with the Consumer Duty which forces firms to prove they are delivering good outcomes for their customers.
The new City minister Bim Afolami has also called for the FCA to embrace more risk in the way it governs financial firms.
Speaking with the Select Committee today however, Alder insisted that the “correct conversations about risk do not imply a deregulatory agenda,” which he said would “undermine the work [the FCA] do in order to level the playing field.”
Despite the volume of planned rule changes, the Treasury has come under fire from some quarters for the speed of movement on many of the reforms.
Hunt’s flagship package of Edinburgh Reforms for the financial services sector was slammed by the Treasury Select Committee last week as a “damp squib,” with the group claiming that many of the changes are yet to be implemented and none had so far had a substantial impact.