Select committee: Financial Services Regulation Committee

Conclusion 152

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)

The FCA and FOS are operationally independent. The FOS’s role is to resolve disputes referred to it. The FCA does not have a role in the FOS’s decision-making, and it cannot direct the FOS to take certain steps. Under the current system, when cases have wider implications, the FCA can provide the FOS with its views on the interpretation of its rules where relevant via the Wider Implications Framework (which was launched in 2022 as a means for certain regulators to work with each other on issues that could have a wider impact across industry 226 ). In addition, FSMA 2023 introduced a duty for the FCA and the FOS to cooperate. 227 However, due to the FOS’s statutory independence, the FCA does not have the power to direct the FOS to uphold a particular interpretation, nor does the FOS have an obligation to consult the FCA. 228

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