On March 17, 2025, HM Treasury (HMT) published an action plan setting out its new approach to ensure regulators and regulation support growth.

Background to the change in approach

HMT begins by highlighting the importance of regulation, which “underpins and impacts almost all areas of the UK economy.” It warns that the current regulatory landscape is not functioning as effectively as it should, “too often” holding back growth and inhibiting private sector investment, and sets out plans to address this through various reforms.

Issues identified with the current system include overly complex and duplicative regulation, a lack of certainty and predictability, and a regulatory approach that has become too risk averse. In a related press release, HMT refers to the proposals as a “radical action plan to cut red tape and kickstart growth.”

Action plan

The action plan sets out HMT’s next steps in its approach to regulation and regulators across sectors such as business, finance, energy and the environment, including a range of pledges from regulators to support this. HMT explains that the action plan will enable a regulatory system that supports innovation and economic growth while ensuring accountability for the quality of regulations introduced, as well as the way in which independent regulators implement and enforce them.

Key points relating to financial services include:

• HMT plans to review the number of the Prudential Regulatory Authority’s (PRA) and FCA’s “have regards” to identify opportunities to rationalise them and ensure a focus on their priorities.
• The Economic Secretary to the Treasury has been asked to examine whether the Financial Ombudsman Service (FOS) is currently delivering its role as a simple, impartial dispute resolution service which quickly and effectively deals with complaints against financial services firms and works in concert with the FCA. This review will focus particularly on a range of points raised as part of HMT’s consultation on the growth and competitiveness strategy, including: concerns around the framework in which the FOS operates (which HMT notes has resulted in it acting, at times, as a quasi-regulator); whether the FOS is applying today’s standards to past actions; and the compensation practices that have developed over time. This work is expected to conclude by summer 2025 and the Government “stands ready to legislate” following the review.
• HMT intends to work with the regulators, the Office for Investment and the City of London Corporation, to establish a concierge service aimed at enhancing the attractiveness of the UK as a destination for global financial services, by making it easier for firms to navigate the UK regulatory landscape and broader barriers to entry.
• The plan also confirms that HMT will continue to develop a package of measures to enable the FCA to support early-stage innovative firms to start conducting regulated activities, including more dedicated support, issuing “minded to approve” notices to support fundraising, and considering whether the legislative framework can be updated to allow relevant firms to conduct limited regulated activities with streamlined conditions.

Key pledges from financial regulators

Annex A to the action plan sets out a list of key regulator pledges, including the following relating to the financial regulators:

The FCA pledges to:

• provide a dedicated case officer to every firm within its regulatory sandbox;
• provide 50% more dedicated supervisors to early and high growth firms, to help them navigate the regulatory system and support their growth;
• extend pre-application support to all wholesale payments and cryptoasset firms;
• indicate more often that it is “minded to approve” start-ups, to help them secure funding;
• simplify its mortgage and advice rules to support greater home ownership;
• continue work to review the contactless payment limits, including removing the £100 ($129.60) limit on individual payments;
• accelerate a review of capital requirements for specialised trading firms.

Together, the FCA and PRA will:

• have their “have regards” reviewed by HMT with a view to rationalizing them and ensuring a focus on their priorities;
• reduce regulatory reporting requirements for firms.

The PRA plans to consult in April 2025 on a matching adjustment investment accelerator aimed at reducing the time between life insurers identifying a productive investment opportunity and making that investment.

There are also pledges relating to the Pensions Regulator, including developing a pensions innovation framework and criteria and launching a related hub by autumn 2025; reviewing the capital reservices to be held by Master Trusts; initiatives to reduce regulatory burdens and improve data and data-sharing; and measures to encourage consolidation and consideration of investment in productive assets.

Authors: Jonathan Herbst (UK), Hannah Meakin (UK), Katie Stephen (UK), Matthew Gregory (UK), Anita Edwards and Simon Lovegrove (UK)  Norton Rose Fulbright