Select committee: Financial Services Regulation Committee

Conclusion 88

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

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)

Witnesses also suggested that slow authorisation processes had contributed to decisions made by firms to locate investments in competing jurisdictions. A notable example of this is the implementation of the Insurance Linked Security (ILS) regime. An ILS is a vehicle to which insurers and reinsurers can transfer risk; the vehicle then issues securities based on this risk, with investors receiving returns in the form of premium payments. 153 This product class was developed by the UK, but due to the UK’s slow authorisation of these products it has lost out on this opportunity to other jurisdictions which now have larger ILS markets. Aon noted: “Singapore copied the UK’s Insurance Linked Security (ILS) regime, … recognising the quality of the UK’s legislation. … Singapore has approved 18 ILS vehicles in a shorter period of time compared to five in the UK. As a result, in 2021 alone we believe that the UK lost out on over US$700 million of foreign investment in ILS to Singapore, because of a more agile and proportionate approach by their regulator.” 154

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