Select committee: Financial Services Regulation Committee

Conclusion 184

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)

There was also considerable concern expressed around the way in which the Consumer Duty might interact with the FOS’s rulings. The FCA and FOS’s Call for Input on the redress system acknowledged: “A mass redress event could be triggered by differing views of how the FCA rules apply. Moving to outcomesfocused regulation (like the FCA’s Consumer Duty) has many benefits … However, for these benefits to be fully realised, firms and consumers need to be confident that we have a consistent interpretation of regulatory requirements.” 284 Again, we heard that this uncertainty impacted on the attractiveness of the UK as a place to invest. Sir Howard Davies said that the Consumer Duty: “creates extreme nervousness among overseas investors because they do not know quite what it means. … It all seems, in a way, quite sensible when you discuss it with the FCA, but then you have the ombudsman, and the record shows that the ombudsman produces judgments that sometimes go well beyond what the FCA recommended.” 285

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