King’s Speech: Cutting regulatory burden on UK financial services firms essential to drive growth
As the King prepares to announce the UK’s Financial Services Bill in his speech on May 13th, Hugh Fairclough, partner and head of financial services at RSM UK, comments: “Productivity in the financial services sector has fallen by 11% since 2010*, largely due to regulatory constraints brought in since the banking crisis in 2008. Cutting regulation could help stimulate growth.
“Of course, government and regulators must tread carefully to maintain consumer protection and avoid increasing the risk of fraud or even another financial crisis. Growth‑led reform succeeds only where deregulation is paired with sharper accountability, not weaker protection. However, there are three regulatory changes that could have a big positive impact without leaving consumers more exposed:
“One immediate area where reform could have meaningful impact is the Senior Managers and Certification Regime. While accountability remains critical, the current framework is overly complex and costly, particularly for mid-sized firms. A more proportionate, risk‑based approach would reduce duplication without diluting individual responsibility or consumer protection.
“The reform of the Financial Ombudsman Service is also hugely welcome. There’s a widespread feeling that some of its rulings have seen it acting as a ‘quasi regulator’. In some cases, firms that have been acting within the FCA’s rulebook have seen the FCA rule against them. This creates uncertainty and adds significant costs for firms.
“Lastly, if the government is serious about the growth and competitiveness of the industry, speeding up authorisations of early-stage financial services companies will be crucial. Currently, it acts as a barrier for firms wanting to move quickly. While there’s an onus on firms to produce high quality applications, there’s significant scope to improve processing times.”