Sam Woods, Deputy Governor for Prudential Regulation and CEO of the PRA, delivered a speech on competing for growth at the Annual City Banquet.
The speech focussed on the secondary competitiveness and growth objective, and highlighted steps the PRA has taken so far to integrate it, including: hosting conferences, conducting research, setting up an internal centre of expertise, hosting innovation discussions with industry, rolling out new staff training for staff and factoring the objective into policy-making.
In July, the PRA also published a report setting out actions taken to advance the objective, including the controversial decision to scrap the bankers’ bonus cap. Woods said the cap was seen as damaging to the UK’s competitiveness, making the UK a less attractive location for global firms and talent, and giving UK firms a disadvantage in attracting talent in their foreign operations. He highlighted that removing the cap was an indication of how serious the PRA is about making regulatory change in areas which are negatively impacting competitiveness and growth.
Woods also drew attention to recent policy work, such as Basel 3.1, Solvency UK and the “Strong and Simple” framework, as examples of the PRA efforts to enhance competition and growth. Woods also noted that the PRA is working on improving the efficiency of the retail ring-fence and streamlining the Senior Managers regime.
The speech stressed that prudential regulation is not fundamentally opposed to risk-taking, with Woods highlighting the role of the regulators in managing, not eliminating risk, which he noted was essential for economic growth and innovation. Woods concluded on the importance of a balanced “sweet spot” in regulation that maintains financial stability while supporting growth and competitiveness.