Select committee: Financial Services Regulation Committee

Conclusion 46

2nd Report - Growing pains: clarity and culture change required - An examination of the secondary international competitiveness and growth objective Published 13 Jun 2025 Paragraph 229

Financial Services Regulation Committee FCA and PRA’s secondary competitiveness and growth objective All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗

Conclusion (the committee's words)

The ‘one size fits all’ approach arises in part from the way the UK authorities apply the Basel Framework to UK lenders. The Basel Framework—‘soft law’ standards issued by the Basel Committee on Banking Supervision—is aimed at internationally active banks. The UK’s approach can be contrasted with that of other jurisdictions such as the US whose capital framework applies on a graduated and proportionate basis depending on the size and complexity of the bank and the level of risk it poses to the system. The Committee welcomes the Small Domestic Deposit Takers (SDDT) regime as a helpful development but considers that the PRA could go further.

From: Financial Services Regulation Committee, 2nd Report - Growing pains: clarity and culture change required - An examination of the secondary international competitiveness and growth objective, paragraph 229, 13 June 2025

Government response

The government responded to the whole report on 3 September 2025 (deadline 3 September 2025).

Summary written by Accountability Index from the government's response. It is not the government's own words.

The government says there is "strong alignment" between the Committee's recommendations and its July 2025 Financial Services Growth and Competitiveness Strategy, agreeing with many recommendations while declining some, including a new compliance cost study and a review of the secondary objective metrics.

On compliance costs (Recommendation 1), the government agrees burdens should be proportionate but "does not intend to commission a new study" "at this time", to avoid duplicating its baselining exercise; it will consider next steps once that work is complete.
On secondary objective metrics (Recommendation 11), the government "does not plan to undertake a further review at this time", citing the granularity of the existing metrics, but says it will continue to monitor the regulators' progress.
On regulatory overlap (Recommendation 2), the government will "consult on the detail" of consolidating the PSR within the FCA and legislate "as soon as possible", but says it would not be "practical or proportionate" to review all financial services legislation and regulator rules in detail.
On reporting to the Committee (Recommendation 15), the government says it cannot "commit to producing specific research" but will provide an update on its work to the Committee within twelve months.

Read the government's response ↗ Report an error