The UK’s financial regulators have urged the government to respect their independence from politics, warning against reducing their regulatory authority.
The warning from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) comes as a response to the findings of a report from the Treasury Select Committee in June.
The report outlined that a desire to increase competitiveness within UK finance and fintech should be the primary focus of regulators. It warned against weakening the standard of regulation for the sake of encouraging industry growth.
The FCA regulates the UK fintech sector, along with the rest of finance. The watchdog said it supported the findings of the report, saying regulatory independence was necessary to maintain.
There have been calls from some leading figures in fintech and government to reduce the regulatory authority of the industry to encourage growth.
In August, a report from an all-party parliamentary group said that reform was required to “break the chains” of regulation, referring specifically to neobanks.
In July, Nikolay Storonsky, the CEO of fintech unicorn Revolut criticised the “principle-driven” financial regulators in the UK for slowing down the progress of innovative companies.
Despite these calls, the Treasury Committee affirmed that regulators’ current role is essential for consumer protection.
“Following the UK’s withdrawal from the EU, regulators have taken on new and greater powers,” said Mel Stride, chair of the Treasury Committee.
“Underpinning our financial services industry is the principle of regulatory independence, as well as the operational independence of the Bank of England.”
Stride said that the Committee would “remain alert to ensure that regulators are not leant on to inappropriately water down regulations to the detriment of the safety and soundness of our financial services system”.
Liz Truss, the newly appointed prime minister, reportedly said during her leadership campaign that she intended to look into the role of regulators should she win.