Unlocking Capital and Accelerating Digital Innovation
The Financial Conduct Authority (FCA) has responded to the government’s call for a regulatory framework that supports economic growth while maintaining consumer protection, market integrity, and competition. In a letter dated 24 December 2024, the FCA outlined its commitment to working collaboratively with the government and industry stakeholders to drive reforms aimed at unlocking capital, accelerating digital innovation, and reducing regulatory burdens.
Key Highlights from the FCA’s Response
1. Unlocking Capital Investment and Liquidity
The FCA plans to implement a series of reforms aimed at making the UK a more attractive investment destination, including:
- A new prospectus regime to ease retail access to corporate bonds and enable a market for private companies.
- Simplified regulatory requirements for the asset management sector.
- Enhanced market data accessibility through a consolidated tape for fixed income data.
- A review of capital requirements for specialized trading firms to improve liquidity.
2. Accelerating Digital Innovation
To support the UK’s ambition of becoming a leader in financial technology, the FCA has proposed:
- A digital securities sandbox and a roadmap for digital assets.
- Improvements in credit information governance.
- Reforming pension tools and dashboards to simplify transfers and information access.
- Collaboration with the Payment Systems Regulator (PSR) to introduce open banking innovations such as variable recurring payments.
3. Reducing Regulatory Burdens
The FCA acknowledges that regulatory complexity can hinder business growth and proposes measures to:
- Streamline the FCA Handbook to remove redundant regulations.
- Increase flexibility within the Senior Managers and Certification Regime (SMCR).
- Simplify mortgage lending rules to support home ownership.
- Remove overlapping standards such as the Mortgage Charter.
4. Supporting Start-Ups and Growth Firms
Recognizing the challenges faced by start-ups, the FCA aims to:
- Assign dedicated case officers to firms in its regulatory sandbox.
- Extend pre-application support to wholesale, payments, and crypto firms.
- Indicate ‘minded to approve’ decisions more frequently to assist start-ups in securing funding.
5. Enhancing International Investment
To attract more foreign investment, the FCA will establish an international presence in both the United States and Asia, enhancing support for firms seeking authorisation in the UK.
