Select committee: Financial Services Regulation Committee

Recommendation 175

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 ↗

Recommendation (the committee's words)

Any reform to the redress framework should be focused on ensuring that the FCA’s and FOS’s views on regulatory requirements are consistent. We believe the following actions should be prioritised: (a) That the FCA is consulted on judgements that are likely to have sector- wide implications. We agree that the FCA should review its DISP rules with a view to enabling the FOS to pause its timescales while it awaits FCA input on the interpretation of its rules and guidance. (b) The precedent-setting effect of FOS decisions should be reviewed, with a view to removing it entirely, particularly for mass redress events whilst retaining the FOS’s original purpose of providing quick and free individual redress. (c) We welcome that the Government has indicated it will consider legislative change if necessary. We stress that the FOS’s remit must be brought closer in line with its original mandate, to provide swift redress rather than examining major complex issues—it cannot continue to function as a quasi-regulator. Consumer Duty

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