Lowering costs for businesses raising capital, streamlining the Senior Managers & Certification Regime (SM&CR), modernizing the financial redress system to help prevent it becoming overwhelmed, and speeding up processes for firms and individuals seeking authorization are among 50 measures announced by the UK FCA to support growth.

In a press release on Tuesday, the FCA said: “Our capital markets power the nation’s economic engine. They are the largest in Europe, while London is the second biggest financial services centre in the world. We have world-leading derivatives, debt issuance, foreign exchange and commodity trading sectors. We are second only to the US in asset management.” UK financial regulators have faced constant pressure and criticism from the government and the parliament over the past year to do more to support economic growth.

The proposals come in response to the Prime Minister’s letter in December asking financial regulators to come up with ideas for growth.

Key proposals

In regards to UK listing, the FCA has said its taking steps to “speed up processes for firms and individuals seeking authorization, recognizing the potential this has to support UK growth and competitiveness.”

“Our aim is to deliver a quicker, more proportionate and predictable approach for firms, while maintaining high standards of entry into regulated financial services,” the watchdog has said.

The package of targets includes:

• Statutory: New firm authorizations and variations of permission applications to be completed in four months (currently six) for complete applications and 10 months (currently 12) for incomplete applications.
• Voluntary: For variations of permission applications where the new permissions closely align to the existing business model, the target will reduce further to three months for complete applications and six months for incomplete applications.
• Voluntary: Payments and e-money firm authorisations and registrations completed in three months (same) for complete applications and 10 months (currently 12) for incomplete applications.
• Voluntary/statutory: For senior manager regime applications, at least half will be completed within 35 days with a proposed statutory deadline of two months (currently three) for all applications.”

On redress, the FCA FOS has said it is “seeking to modernize the financial redress system to help prevent it becoming overwhelmed, delaying consumer compensation.

“The changes will help firms identify and resolve issues before complaints escalate and aim to give greater predictability, so businesses have confidence to invest, innovate and support UK growth.”

The proposals include:

• Improving how the FCA and Financial Ombudsman work together to ensure consistency in the interpretation of regulations. This includes a new referral process to improve transparency about regulatory alignment and a lead complaint process to look at novel and significant complaint issues as they emerge.
• Clearer guidance for firms on reporting issues to the FCA sooner, alongside good practice examples to help identify and resolve complaints.
• Guidelines to help industry assess and trigger the need to resolve a situation with wider implications that could spike complaints.
• Changes to the way the Financial Ombudsman processes complaints to ensure they are well-evidenced and ready before an investigation begins.  

On SM&CR, the FCA and Prudential Regulation Authority (PRA) have announced proposals to streamline the regime. These include:

• Give firms more time and flexibility to submit applications for approving new senior managers when there has been an unexpected or temporary change.
• Strip out duplication where the same individuals are certified for separate functions, which would reduce the number of certification roles by 15%.
• Provide guidance on how to streamline the annual checks firms need to undertake to certify individuals are ‘fit and proper’ to do their role.
• Allow more time for firms to report updates to senior manager responsibilities.
• Increase how long criminal record checks for senior manager applications are valid for, prior to application submission.
• Help firms to better understand the definition of certain SMF roles.
• Give firms more time to update the directory, which lists certified staff. 

And on businesses raising capitals, the FCA said: “Stripped back rules will make it easier for companies to raise the money they need to grow, supporting the UK’s leading capital markets.”

The reforms include:

• 
  Companies that are already listed won’t need to publish lengthy prospectuses to issue more shares, in most cases.  
• The length of time between a prospectus being issued and an initial public offering (IPO) is being halved, helping companies list more quickly on the stock exchange.  
• Companies will be able to issue corporate bonds to retail investors more easily and a new public offer platform will help smaller growth companies raise cash to scale up.”

Delivering on growth

Facing constant criticism and demands, the FCA has put growth at the heart of its new five-year strategy, with a promise to loosen and streamline regulation, reduce regulatory burden on businesses and set out a vision for informed risk-taking.

The regulator has already taken steps in certain areas, including making it simpler for companies to list in the UK, announcing new transparency rules for bonds and derivatives markets, and introducing new rules for financial advice services.

And in May this year the FCA also introduced PISCES, a new private stock market enabling investors to buy stakes in exciting growth companies.

The regulator is also working on putting together a comprehensive regulatory framework for crypto and other digital assets, another key area of potential growth.

Despite these efforts, a parliamentary report last month criticized the FCA for clinging to a risk-based approach that hindered international competitiveness and economic growth.

Chancellor Rachel Reeves also asked financial regulators in her Mansion House speech last night to abandon their risk-based approach to regulation and encourage a culture of informed risk-taking.