Source · Select Committees · Treasury Committee
Recommendation 8
8
Paragraph: 72
We recommend that there should be a secondary objective for both the Financial Conduct Authority...
Recommendation
We recommend that there should be a secondary objective for both the Financial Conduct Authority and the Prudential Regulation Authority to promote long-term economic growth. The wording will be crucial: pursuing international competitiveness in the short term is unlikely to lead to economic growth or international competitiveness in the long term if it is achieved by weakening the UK’s strong regulatory standards. Weakening standards could reduce the financial resilience of the UK’s financial system and undermine international confidence in that system and the firms within it.
Paragraph Reference:
72
Government Response
Acknowledged
HM Government
Acknowledged
The government notes this recommendation. Following close consultation with the PRA and the FCA, Clause 24 of the FSM Bill implements new secondary objectives for the FCA and the PRA to provide greater focus on the medium to long-term growth and competitiveness of the UK economy. The secondary objectives for the FCA and the PRA introduce a new focus within the regulatory framework on these important issues, while still maintaining the regulators’ focus on their existing objectives of ensuring that UK firms remain safe and sound, that the UK’s markets function well, that there is effective competition in the interests of consumers, and that consumers and users of financial services receive an appropriate degree of protection. The government is committed to maintaining high regulatory standards in the UK, so these new objectives are subject to regulators aligning with relevant international standards. The Bill also only enables the FCA and the PRA to act in a way which facilitates growth and international competitiveness in the medium to long-term. Resilient and efficient markets, underpinned by effective regulation and competition, are essential prerequisites for fostering an internationally competitive financial services sector that in turn facilitates long-term growth and international competitiveness of the UK economy.