The Financial Conduct Authority (FCA) has unveiled a five-year plan to “significantly streamline” its operations in a drive to improve efficiency.
The City watchdog said it would take “a less intensive approach” to overseeing financial services companies and “strip out redundant requirements” holding the industry back, starting with a review of its redress regime.
It also wants to simplify its authorisation processes by automating jobs currently carried out by supervisors.
They currently oversee some 100,000 cases a year but the FCA said it would fast track the process through digitalisation.
See also: RGL bolsters group claim against Hargreaves Lansdown over Woodford
The FCA said the new strategy was driven by a need for better efficiency, but Broadstone’s head of policy David Brooks warned that it risks cutting back too much.
“The FCA states that it is aiming to strip back unnecessary costs to drive growth and create improved consumer outcomes but there is likely to be nervousness around the extent to which consumer protections are diminished such as its review of mortgage affordability requirements,” he added.
Nevertheless, FCA chair Ashley Alder said the revised plan would make the industry re-access its attitude towards risk.
“Now is the time to look again at our collective attitude to risk. Too often the focus has been on the risks of a decision taken rather than the lost opportunity of taking none. We want to change that,” he said.
See also: Spring Statement 2025: What to expect from the chancellor’s speech
A heathier risk appetite could benefit the industry, but Just Group communications director Stephen Lowe said the FCA should be cautious that it doesn’t come at the expense of consumer protections.
“One question inherent in regulation is how much consumers need to be protected from their own poor choices or bad luck. The FCA’s strategy acknowledges that some risk is good even if it means a minority will not get the outcome they hoped for.
“So long as firms and advisers are doing the right thing – that is, adhering to their obligations under the Consumer Duty and other rules – then the system has done its job.”
See also: Natixis: Fund selectors remain optimistic over markets despite geopolitical uncertainty
Richard Monks, UK financial regulation partner at EY, said the FCA’s new strategy “marks a shift in tone” as the regulator “moves on from the more assertive language” of the past.
Yet he also noted that the watchdog only gave a vague idea of how it would track the progress of its new goals for the next five years.
“There are a number of well-considered measures announced today, including the long-awaited review of the handbook and a return to focus on the potential of FinTech,” he added.
“What is not apparent in the strategy are the metrics through which the regulator will track progress against its ambition for growth – without this accountability, it will be difficult to measure success over time.”