The House of Lords Financial Services Regulation Committee has
written to the Chancellor of the Exchequer, challenging the
Government to set out a clear policy on how growth in the
financial services sector will generate growth in the real
economy, and expressing its disappointment at the Government's
response to the Committee's recent report, ‘Growing Pains:
Clarity and Culture Change Required.'
In his letter to the Rt Hon MP, the committee's Chair,
, has highlighted
several of the Committee's key findings which the Government had
not engaged with in its response.
In his letter, Lord Forsyth has asked the Chancellor a number of
questions. These include:
- What is the Government's policy to ensure that the growth of
the financial services sector will facilitate growth in the wider
economy?
- Whether the Government is satisfied with the FCA and PRA's
understanding of how they can support economic growth?
- What emphasis will the Government place on the need for the
FCA and PRA to set out how they will facilitate the medium to
long-term growth of the UK economy in their proposed long-term
strategies?
- Why the Government considers it inappropriate to review the
metrics used to assess the FCA and PRA's performance of their
Secondary International Competitiveness and Growth Objective?
- What specific issues have prevented HM Treasury from
undertaking comparisons of international regulatory performance?
- How does the Government intend to identify aspects of the
UK's regulatory regime which incur expenses to businesses in
excess of those incurred in other jurisdictions, so that the
Government might propose targeted reforms?
, Chair of the
Financial Services Regulation Committee, said:
“Our report identified key barriers in financial services
regulation that inhibit the international competitiveness of the
UK economy, in particular the financial services sector, and its
medium to long-term growth.
“We found a significant gap in the Government and regulators'
understanding of how regulatory mechanisms directly impact growth
in the wider economy.
“Our committee expressed concerns that current capital
requirements on lenders constrains their ability and willingness
to lend. We also criticised the risk aversion of the FCA and PRA,
which we felt held back the sector from facilitating growth in
the wider economy.
“The success of the Secondary Objective, which is necessary to
deliver economic growth the UK desperately needs, requires the
Government to properly engage with the findings of our report,
which is underpinned by an extensive evidence base and informed
by the testimony of leading executives from across the financial
services sector.”
Read Lord Forsyth's letter.
