Martin Tilley: FCA must grapple growth v regulation question

In late December, Prime Minister Sir Keir Starmer tasked 10 regulators with removing ‘barriers to growth’ in order to attach the jump leads to the UK economy. On 16 January, the FCA wrote a letter to the Government to outline their plans to support the growth agenda. The challenge faced by the FCA is that of balance; enabling growth at the same time as delivering against its three other statutory responsibilities: towards protecting consumers, protecting the integrity of the UK financial system and promoting effective competition in the interests of consumers. The imposition of the new responsibility focussed on domestic economic growth could bring conflict with these three objectives, leading to a more ambivalent and less predictable regulatory environment. There were a few points of consideration relating to pensions in the letter, some of which I have explore below. I was pleased to see specific mention of finalisation of next steps for the Pension Dashboards in the letter. There’s a huge opportunity presented by the dashboards. It’s critical, however, that the FCA makes the industry aware of the next steps for delivery and evolution of the dashboards. The promise made by the FCA to the Government is to ‘reform online tools explaining pensions’. The decision to evolve online information relating to pensions is always welcome, however it remains that we have work to do to engage people with pensions. If people are not engaged with their pensions, offering additional services or information online is unlikely to be a driver for change on its own. There’s also a pledge to improve pension transfer times which have long been in the spotlight. The FCA has pledged to ‘streamline’ its handbook, noting that it has received industry input on roles which could be ‘removed or simplified’. While the acknowledgement of the industry’s feedback is welcome, it’s important that this isn’t just a ceremonial activity, and the insight from the experienced figures within is taken on board and used to make positive change. The concern is that the FCA is being used as a windsock – blowing in whichever direction the Government suggests that they should. There’s also mention in the letter of potential changes to AML requirements and relaxing KYC requirements on ‘small’ transactions. The acknowledgement from the FCA that its current handbook requires reform is surely music to a lot of ears across the financial sector. Could this be an acknowledgement that their existing rules are overly complex? Perhaps the most surprising point in the FCA’s letter is the removal of the need for a Consumer Duty Board Champion. The removal of this requirement implies that the FCA feels that firms are discharging the regulations and are embedding the Duty without the need for explicit board oversight. This seems to be a premature decision. The implementation of the rules is still in relative infancy, and I am surprised that the FCA is already looking to remove this board ownership. The FCA called out specifically that future consultations on consumer protection would ask whether the Consumer Duty is sufficient as opposed to introducing new rules. This seems to be a reasonable approach to avoid over regulation. With the significant wealth held in UK pensions, there is a huge opportunity for the Government and regulators to incentivise pension investment into the UK economy. One hopes that the streamlining of regulations will help this process along. It is vital, however, that the FCA is fully alert to the potential conflicts made possible within its now-four statutory objectives. Martin Tilley is chief operations officer at WBR Group martin.tilley@wbrgroup.co.uk

Martin Tilley: FCA must grapple growth v regulation question

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