The Financial Conduct Authority (FCA) has unveiled plans to cut 70% of the legal text required by investment firms in an effort to “remove unnecessary burdens on firms”.
It said the current capital rules were designed for banks, making them overly complex and not necessary for the majority of financial services companies.
Excessive regulation means these firms spend too much time interpreting and applying rules rather than taking action, it said.
Interim executive director of markets Simon Walls said he hopes that streamlining regulatory requirements will encourage growth within the financial services industry and make the UK a more competitive market.
“We are always trying to be a smarter regulator, and part of that agenda is reducing unnecessary burdens on firms,” Walls added. “The aim here is to make the rules around how firms hold their capital simpler for the vast majority of firms.
“We want the revised framework to be proportionate, effective, and aligned with the needs of investment firms while maintaining high standards of financial resilience and consumer protection.”
These latest cuts from the FCA are part of a drive launched in March to “significantly streamline” its operations and take “a less intensive approach” in its oversight of the industry.
The regulator most recently reviewed its Consumer Composite Investment (CCI) rules last week with an aim of simplifying fee disclosures.
It also consulted with the Treasury earlier this month on removing EU requirements such as the alternative investment fund managers directive (AIFMD), which Walls said would “allow firms to operate more efficiently”.