Select committee: Financial Services Regulation Committee

Conclusion 155

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 former Economic Secretary to the Treasury and City Minister, Bim Afolami, highlighted the “action, powers and remit of the FOS” 233 as a key area for regulatory change. He said: “We now have a situation where you have a Financial Ombudsman that can make determinations that supersede or change rules that were in place at a time when the FCA had already made rules and there is primary legislation that underpins the secondary legislation under which the FCA makes rules.” 234 Andy Briggs MBE, Chief Executive Officer of Phoenix Group, provided us with an example of this issue in practice: “In 2016, the regulator issued more regulation around reviewable whole of life. The industry therefore took that on board and changed their practices prospectively based on that regulation. We now have a whole host of claims across the industry from, say, a group from 2013. We are looking at the moment at where the FOS is applying the 2016 regulation to communications and business sold in 2013. That is a specific live example.” 235

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