Assessing Obstacles and Prospects for the City of London Development
The City of London Corporation has published a comprehensive report titled "Regulating for Growth: A Cultural Shift for a Competitive UK", outlining key recommendations to transform the UK's regulatory culture and unlock economic growth. The report, produced in collaboration with industry partners and law firm A&O Shearman, serves as a call to action, urging regulators, government, and industry to work together to foster innovation, investment, and job creation across the UK.
The report emphasises the need for regulation to prioritise growth, not just risk, as highlighted by the Lord Mayor of London, Alastair King. This objective must be reflected not only in new rulemaking but also in the approach regulators take to enforcing rules and supervising firms on a daily basis.
Key recommendations include collaboration between HM Treasury and the regulators to promote growth and manage risk, reforming the Financial Ombudsman Service for greater predictability, applying consumer protection rules more proportionately, and reducing cross-border regulatory friction to support global trade. Operational changes are also urged, such as faster approvals, smarter use of regulatory sandboxes, and a more pragmatic Senior Managers' Regime to attract and retain top talent.
The report builds on the Financial Services and Markets Act 2023, which introduced a secondary objective for regulators to promote the international competitiveness and growth of the UK economy. The Act is seen as a watershed moment, providing an opportunity to embed a new mindset across the regulatory system.
The recommendations aim to reinforce and expand upon initiatives already in progress. They fall under three themes: Tone from the top, Core policy reforms, and Day-to-day operations. The Lord Mayor's theme for the year, "Growth Unleashed," champions innovation and rekindles the City's dormant animal spirits.
The City's Policy Chairman, Chris Hayward, calls for a new mindset across the regulatory system. He stresses the importance of a coordinated effort between the Government, regulators, and the industry. James Roe, Partner at A&O Shearman, echoes this sentiment, emphasising the need for collaboration to ensure the regulatory framework enables growth, investment, and job creation across the UK.
The report comes at a critical time, as the House of Lords Financial Services Regulation Committee has warned the UK risks ceding ground to more dynamic global financial centres if it fails to align its regulatory culture with its economic ambitions. The report's recommendations are aimed at ensuring the UK remains competitive on the global stage.
In addition to the practical recommendations, the report suggests improving cost-benefit analyses, including identifying hidden costs and impacts on growth that may flow from a policy. This approach aims to ensure that regulatory decisions are made with a clear understanding of their potential impact on economic growth.
The report provides a comprehensive set of measures to support the growth and competitiveness of the UK economy. It is hoped that by implementing these recommendations, the UK will be able to unlock its full potential and maintain its position as a leading global financial centre.
- The report advocates for regulators and policymakers to prioritize growth, not just risk, as a cultural shift, reflecting the Lord Mayor's call for such an adjustment.
- The recommendations within the report urge the Government, regulators, and the industry to work collaboratively to foster innovation, investment, and job creation across the UK.
- Key suggestions for improving the UK's regulatory environment include reforming the Financial Ombudsman Service, applying consumer protection rules more proportionately, and reducing cross-border regulatory friction to support global trade.
- The report's aim is to ensure the UK remains competitive on the global stage, as failing to align its regulatory culture with its economic ambitions could result in ceding ground to more dynamic global financial centres.
