UK May Push More Reforms on Financial Regulators

The UK government has issued a strong statement addressing the present regulatory environment, announcing its willingness to pursue more measures targeted at directing financial regulators toward prioritizing sector development. This proclamation is the most recent step in the ongoing conflict between government officials and the Financial Conduct Authority.

The FCA has recently been under pressure, most notably from Chancellor of the Exchequer Jeremy Hunt. The FCA's contentious proposal to publicly name corporations under investigation in their early stages sparked outrage, with the government arguing that it contradicts the FCA's secondary goal of improving the City's competitiveness, which was enacted last year.

Treasury Minister Bim Afolami said at a London event that the administration is prepared to escalate regulatory changes if required. “We will go further if necessary if things are not developing in the way that we would all like to see,” Afolami said, highlighting the need for regulators to adopt a growth-oriented approach. According to him, there is a perception inside the sector that this transformation has not occurred adequately.

Since Brexit, the gap between the governing Conservative Party and the UK's banking authorities has become wider. Senior government officials have expressed growing frustration with the FCA's failure to exploit the opportunity afforded by the UK's exit from the European Union. This irritation was clear when Business Secretary Kemi Badenoch slammed the FCA's idea to require financial businesses to provide gender and diversity statistics.

However, the political drive for growth-oriented policies is considered by regulators as possibly jeopardizing the high standards that characterize the UK's banking sector's competitiveness.

Afolami recognized the need for patience, noting that he intends to monitor how regulators, notably the FCA and the Prudential Regulation Authority, proceed toward the growth goal before deciding on future action. “It's important to give them time,” he said, reflecting a cautious attitude to overseeing the new regulatory framework's implementation.