HMT and PRA respond to House of Lords Committee' report on barriers to growth and competitiveness

HM Treasury (HMT) has published a formal response letter dated 2 September to the House of Lords Financial Services Regulation Committee's June report on the UK Financial Conduct Authority (FCA) and UK Prudential Regulation Authority's (PRA) secondary international competitiveness and growth objectives. The letter welcomes the Committee's recommendations and notes their alignment with the UK government's Financial Services Growth and Competitiveness Strategy, announced in July, reaffirming its commitment to regulatory reform. HMT's response outlines ongoing efforts that directly address the Committee's recommendations, including reforms to the UK Financial Ombudsman Service (FOS) to restore its original role as a swift and impartial dispute resolution body, a review of the consumer duty's application to wholesale firms, with the FCA due to report back to the Chancellor by the end of September, and the prioritisation of the Advice Guidance Boundary Review to tackle the advice gap. Appendix A of the letter provides further detail on the government's response to each of the Committee's recommendations, including ongoing work and future priorities.

The PRA has also published a formal response letter dated 13 August to the Financial Services Regulation Committee's report. While the PRA welcomes the report and reiterates its commitment to embedding the SCGO while safeguarding financial stability, it challenges the report's portrayal of a "culture of risk aversion" in the regulators. It notes that several key changes introduced by the PRA, such as the removal of the bonus cap and its current work on shortened deferral periods, were not fully reflected, with only a third of its publicly announced SCGO-related initiatives cited in the report (at the time of its publication). The PRA also notes that some of the criticisms levelled at regulators by industry may warrant closer examination. The PRA addresses these areas in more detail in the Annex to its response, structured around seven cross-cutting themes aligned with the Committee's recommendations.

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