Select committee: Financial Services Regulation Committee

Conclusion 127

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 suggested that an important constraint on the FCA and PRA employing staff with experience of the sector is the level of remuneration offered, particularly in comparison to pay in the private sector. Noting the difficulty of recruiting and retaining such staff, the Alternative Investment Management Association told us that: “We understand that this is challenging as the FCA does not have the resources to compete with private sector pay.” 204 Moreover, we received evidence that this discrepancy has widened, as Sir Howard Davies told us: “A recent report by New Financial, … says that real pay in the regulators has fallen by 25% in the last decade.” 205 Other witnesses emphasised that matching the pay of regulators more closely to that of industry would require exemptions from public sector pay scales. Andrew Griffith MP told us: “we need to accept that, when you are trying to engage in a symmetrical fashion with very sophisticated financial counterparties, you may sometimes have to step outside the pay bands.” 206

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