Select committee: Financial Services Regulation Committee

Conclusion 118

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)

Some witnesses suggested that the experience and capacity of supervisors leads to slow and inefficient approval processes, which may impact on their ability to scale and grow. Witnesses noted that the limited resources allocated to smaller firms have introduced delays to critical supervisory activities. Allica Bank told us that: “many scale-up firms have seen significant delays to the capital review process” 186 and that “this is primarily a function of there being insufficient people in the relevant specialist teams at the PRA to work on these matters.” 187 As part of the capital review process the PRA may apply additional firm-specific capital holding requirements dependent on a firm’s risk profile. 188 Allica Bank noted that delays in the capital review process have contributed to significant uncertainty regarding the bank’s future capital requirements and that: “This degree of capital uncertainty reduces the investor confidence that is required in continuing to supply capital to underpin … SME lending growth.” 189

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