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6 Key Recommendations from the UK Treasury to the Financial Conduct Authority (FCA)

6 Key Recommendations from the UK Treasury to the Financial Conduct Authority (FCA)

UK Financial Services and Markets Act 2000 requires the Treasury, at least once in each Parliament, to make recommendations to the FCA about aspects of the government’s economic policy to which the FCA should have regard when advancing its objectives and discharging its duties.

The latest recommendation was published on 14 November 2024, and, among other points, it highlights the importance of supporting innovation.

The recommendations highlights that the FCA should have regard to the government’s policy towards the financial services sector, where the government’s top priority is to promote its growth and international competitiveness.

As part of this, the FCA should have regard to:

  1. The vital contribution of the financial services sector to overall economic growth and in supporting the real economy through sustainable lending, and by attracting and mobilising increased investment and encouraging trade;
  2. Creating a regulatory environment ‘which facilitates growth through supporting competition and innovation, and encouraging newer and more innovative firms to startup, scale-up and remain in the UK;
  3. Maintaining and enhancing the UK’s position as a world-leading global finance hub and a destination of choice for international financial services business, including by demonstrating leadership in international regulatory forums;
  4. Leading the world in sustainable finance, including by unlocking the full potential of the financial services sector to fund the green transition; making the UK a global hub for sustainable finance activity, and delivering a world-leading sustainable finance regulatory framework;
  5. Ensuring the UK’s capital markets are competitive and support UK growth, including through the ongoing Pensions Review that aims to unlock billions of pounds of investment for UK businesses with high growth potential; and,
  6. Reinforcing financial inclusion and supporting home ownership to enable individuals to access the financial services and products they need to fully participate in the economy, including the government’s commitment to making home ownership more accessible by fixing the planning system and building 1.5 million more homes, and supporting first-time buyers who struggle to save for a large deposit.

The role of supervisors in driving innovation is something very close to my heart, so it’s particularly interesting to read this emphasis.

It’s also great to see financial inclusion explicitly mentioned, as this is a critical area for ensuring broader participation in the economy including in insurance and pensions.

Read more here.