New Regulators' Code
As my colleague Sam Bishop has commented on our Financial Services Blog, the new Regulators' Code imposed by the government in April may have a marked impact on the direction of the FCA and PRA's regulatory approach, and in particular on the importance of economic growth.
Whilst FSMA already requires both bodies to "have regard to the desirability of sustainable growth in the economy of the United Kingdom in the medium to long term", the Regulators' Code pushes this issue right to the fore. Certainly the FCA has really pushed its consumer agenda in particular in a series of recent speeches, market studies, and thematic reviews, e.g. concerning Motor Legal Expenses Insurance and Mobile Phone Insurance. At times it has effectively criticised insurers for exceptional loss ratios and too much profit. Similarly, the PRA is consulting on a new regulatory principle requiring all firms to 'act in a prudent manner'.
Although we applaud the FCA for its rigorous approach to certain areas of undoubted excess, we also believe that the industry must have room to breathe. We would welcome a balanced approach that, by allowing a little more entrepreneurial risk, will grow profits in a manner beneficial for customers, employees, investors and the wider economy alike. We at RPC would be delighted to talk to any client that wishes to review any FCA or PRA rules or guidance (draft, new or old) against this Code, and to consider any representations that may be made.