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More than 100 pages of regulations covering consumer finance, investments and mortgage lending will be “retired” by the UK financial watchdog in response to calls from businesses and the government to streamline its rules.
The Financial Conduct Authority said it would also withdraw hundreds of supervisory publications and review its “prescriptive disclosure rules” to give firms more flexibility in areas such as online transactions.
The announcement, which is rare for a regulator better known for creating new rules than destroying them, came after chancellor Rachel Reeves announced a “radical action plan to cut red tape” to lower the cost of regulation for business by a quarter.
The simplification of the FCA’s rule book, which runs to more than 10,000 pages, came as the regulator prepared to announce its new five-year strategy on Tuesday, which will include a commitment to support economic growth by lightening the burden of regulation.
The watchdog last year called for financial firms to suggest rules that could be scrapped because they overlapped with its new consumer duty regime, which requires companies to ensure their customers are treated fairly and receive “good outcomes”.
One area the FCA plans to review is its rule book for credit advertising, to examine whether lengthy terms and conditions are still needed. It will also look at whether businesses have to continue applying UK rules to overseas customers in areas such as insurance.
“Now the consumer duty is in full force, we’re making changes quickly where stakeholders want us to, to cut unnecessary costs, support growth, and ultimately help consumers get better outcomes,” said Sarah Pritchard, the FCA’s head of competition, consumers and international.
Some companies have complained that the consumer duty is too vague and they would prefer that the FCA keeps detailed rules to give them a better idea of exactly what activities are allowed.
The watchdog said it received “clear feedback from industry that now is not the time for widespread changes to its rules,” adding that it would “continue to engage with industry and others to get the balance right without a widespread overhaul”.
Supervisory publications that will be retired by the FCA under its new approach include ‘Dear CEO’ letters to bosses in a certain sector, portfolio letters, and multi-firm and thematic reviews that predate its earlier three-year strategy launched in 2022.
Pritchard said: “These proposals are part of our long-term efforts to future-proof our rules, reduce burdens for financial firms and will help the ambitious government targets to cut the cost of regulation”.
