The pedestrian pace of government and parliament is preventing City watchdogs from introducing pro-growth measures fast enough, the boss of the Financial Conduct Authority (FCA) has said as he called for the introduction of statutory timetables to ensure the Treasury ratifies deregulation faster.
Nikhil Rathi told the Treasury Committee that the FCA was “moving as fast as [it] can” to meet the government’s push to ‘regulate for growth’, having unveiled a flurry of measures to slash red tape over the course of this year. But he added that the watchdog – which is the UK’s largest financial regulator – was “dependent on a number of others in the system” including parliament and government departments to sign off on processes which often take several years.
“What we’ve seen a little bit in the debate in our political economy has been a lot of focus on what regulators should do, and I understand that, and we’re seeking to lead and lean in,” he said. “I would say that pace and timetables – perhaps in a statutory timetable for where the Treasury may be able to move quicker – may be no bad thing, because we often have to wait.”
The comments are the latest salvo in an emerging blame game over why ministers’ deregulation push has not already helped fire up the UK’s stuttering economy, which has now contracted or been flat every month since June.
Speaking to MPs on Wednesday, Keir Starmer blamed the excessive amount of “checks and balances” and “arms-length bodies” in the UK for preventing his government from delivering faster.
“My experience now as Prime Minister is one of frustration,” he said. “Every time I go to pull a lever there are a whole bunch of regulations, consultations, arms-length bodies, that mean the action from pulling the lever to delivery is longer than I think it ought to be.”
FCA ‘could well’ have probed Budget leaks if from private sector firm
But Rathi launched a robust defence of his regulator’s efforts to meet the Treasury’s red tape shake-up, which have included moves to relax rules around mortgage deposits and financial advice and an embrace of riskier cryptocurrency products.
He added: “I think there’s been an awful lot of focus on regulation and what regulators can do, and that’s been a bit of a political debate,” he said, pointing to the FCA’s recent overhaul of listing rules and whether it alone will spark a renaissance in UK capital markets.
“We’re doing our bit here, but the entire system needs to move – whether that’s on pension funds, on tax, on some of the broader risk culture there was,” he added. “There tended to be a bit of focus on ‘Oh, well, let’s get the regulators, they can solve this.’ And we can’t do it on our own.”
Separately, FCA chair Ashley Alder said the watchdog “could well” have investigated the series of leaks that emerged from the Treasury ahead of last month’s Budget, had they come from a private sector organisation.
Rathi wrote to Treasury Committee chair Meg Hillier this month, confirming the body would not immediately launch an official investigation into the string of briefings on income tax and other market-sensitive policies. He said scrutiny over how the government publicly communicates its plans ahead of a fiscal event “is a matter for Parliament”.
But asked whether the FCA would have taken a different approach had the briefings related to – and emanated from – a listed company, Alder said: “Depending on the circumstances, we could well do that.”