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FCA highlights simplification as means of supporting growth

The FCA’s letter in response to the Prime Minister setting out how the FCA wants to collaborate with the Government to encourage growth highlights the work the FCA has already done in the wholesale markets to unlock capital and liquidity and looks at its plans for the year particularly in respect of digital innovation and rule simplification.

Among its 2025 initiatives are:

  • progressing the digital securities sandbox;
  • relying on existing frameworks when considering regulatory issues arising from use of AI;
  • introducing a new open banking method – variable recurring payments;
  • developing open finance using powers it expects to get under the Data (Use and Access) Bill and potentially prioritising SME lending;
  • considering removing the £100 contactless limit, to level the playing field with digital wallets;
  • new digital service standards – but it needs the Government to take action to allow better digital authentication and make the promised Companies House improvements;
  • generally streamlining its handbook and reducing reporting burdens;
  • to make the SMCR more flexible (but giving no further details);
  • to remove the need for a Consumer Duty Board Champion and when considering new rules take into account whether the Consumer Duty is already enough;
  • starting to simplify responsible lending and advice rules for mortgages; and
  • considering relaxing AML KYC requirements on small transactions.

It also calls on the Government to speed up the CCA reform initiative.

For new market entrants, the FCA is looking to make its support better, and particularly it will do more to support early and high growth firms, including extending its pre-application support to all wholesale, payments and crypto firms and provide “minded to authorise” letters to help promising start ups to get funding. It is aware that some innovative start-ups find it hard to meet all threshold conditions immediately and wants to consider how they might be able to conduct limited regulated activities with streamlined conditions.

Finally, it notes that there will be failures, and that the FCA will not always be able to stop all harm. It suggests having metrics for tolerable failures within the overall system.

Emma Radmore