Financial Services Regulation Committee questions Chancellor on FCA and PRA growth objectives
The House of Lords Financial Services Regulation Committee has issued a letter to the Chancellor of the Exchequer, the Rt Hon. Rachel Reeves MP, responding to the government’s reply to its report Growing Pains: Clarity and Culture Change Required. The Committee welcomed the government’s recognition of the financial services sector’s role in promoting economic growth but expressed concern that key findings necessary for achieving the Financial Conduct Authority (FCA) and Prudential Regulation Authority’s (PRA's) secondary international competitiveness and growth objective had not been adequately addressed. It criticised the lack of a clear, evidence-based policy showing how sectoral growth would stimulate the wider economy, the limited assessment of regulatory impacts on investment and SME lending, and the regulators’ risk aversion. The Committee called for clearer government direction, stronger alignment between regulators and economic policy, and the inclusion of robust, outcomes-based metrics to measure the regulators’ contribution to real economic growth. It questioned whether current performance targets were sufficiently ambitious and urged the Treasury to commission international benchmarking of regulatory performance. The Committee requested detailed answers to eleven specific questions on growth policy, regulatory alignment, metrics, and comparative analysis, reaffirming the need for greater clarity and cultural change to ensure financial regulation effectively supports the UK’s economic strategy.