Date: 25 September, 2023
The current landscape of regulatory frameworks in financial services is undergoing significant reconfiguration in the UK. The approach to regulation is pivotal for shaping the competitive edge of the nation’s financial markets, a stance that necessitates proportional regulation and a thorough debate on risk appetite.
A recent focus has been resetting financial service rules, a move expected to set the stage for market functionality for decades. The Financial Conduct Authority (FCA), a key player in this transformation, acknowledges the need for broader engagement beyond its entity, involving industry collaboration in various initiatives such as reviewing advisory boundaries, tech sprints, and sandboxes. This approach aims to future-proof the new regulatory framework called the Smarter Regulatory Framework.
Regulation, often perceived as a restriction, is fundamentally designed to underpin market integrity, transparency, resilience, and cross-border compatibility. Market confidence is contingent upon upholding regulatory integrity, addressing fraud, ensuring healthy competition, and fostering global competitiveness.
The adaptability of regulations is crucial in the face of evolving markets, technological advancements, and shifting service delivery methods. A move toward an outcomes-based regulatory model has been advocated, emphasizing defining desired outcomes, precise measurement, and prompt action to collectively achieve these goals.
In parallel, efforts are underway to revamp listing rules to attract diverse companies, promote competition, and expand investment choices for stakeholders. These changes seek to enhance the UK’s position as a global market while balancing varied viewpoints and aligning with international standards.
Risk is an inherent part of regulatory reform, necessitating a public discourse on risk tolerance and the trade-offs involved in significant regulatory changes.Furthermore, a deliberate endeavour is underway to guarantee robustness in the face of shifting market conditions, specifically with reference to technology dependencies and third-party services within the financial industry.
Addressing financial literacy and confidence among consumers is another crucial aspect. Initiatives are in place to empower consumers with financial knowledge, alongside a comprehensive review of advice and guidance boundaries to enhance access to financial support and aid decision-making.
Competitiveness remains a primary objective, guiding operational efficiency, proportionate regulations, innovation, and market stability. Efforts are directed at aligning regulatory attention with the evolving needs of industries, such as asset management, and supporting technological innovations through various sandbox and testing environments.
In conclusion, while regulatory reforms are underway, more than their mere enactment is needed for market success. Regulations serve as foundational pillars, akin to ground rules, essential for survival and prosperity. Collaboration among regulatory bodies, government entities, and market participants is imperative to navigate these changes and foster well-functioning markets.
References:
https://www.fca.org.uk/news/speeches/role-regulation-encouraging-investment-city