Recommendation 143

We received evidence that a range of regulatory requirements disproportionately affect smaller and medium sized firms, constraining their growth and limiting the competition between UK financial services firms needed to ensure a dynamic and growing sector. Witnesses cited the extensive use of thresholds, particularly relating to balance sheet size, in determining the application of regulatory regimes. Monzo emphasised the large number of thresholds that impose additional regulatory requirements, placing an effective ceiling on a firm’s growth, by introducing additional costs which these firms cannot shoulder as easily as established firms: “UK challenger banks must negotiate 53 such thresholds as they grow. These thresholds disproportionately impact smaller challenger banks and act as a barrier to growth and investment.” 214