Sarah Pritchard, executive director of markets and international at the Financial Conduct Authority (FCA), has highlighted the regulator’s shift toward a less prescriptive, more outcomes-focused framework.
At the FT Financial Advice Forum on the 24th of September, Pritchard delivered a speech titled ‘Like London’s Roman Wall, Financial Rules Must Adapt.’
During this speech, she shed light on how financial regulations must evolve to meet changing circumstances.
Pritchard said the FCA’s new approach would allow for innovation and progress, while ensuring that consumer protection remains a priority.
Pritchard also focused on the importance of reform in the financial advice sector.
The FCA’s 2022 Financial Lives Survey showed that only 8% of adults sought financial advice in the past year.
Additionally, research from Barclays revealed that 13 million people hold £430bn in cash savings that could be better utilised through investment.
More than two-fifths (43%), Pritchard noted, were hesitant to invest due to concerns about risk and complexity.
Pritchard said: “We want to see a thriving consumer investment market where consumers can make more informed decisions, based on their risk appetite.”
The FCA’s ‘InvestSmart’ campaign was launched to address this by helping consumers, particularly inexperienced investors, make informed decisions about their investments.
The ‘Advice Guidance Boundary Review’, which the FCA is pursuing in collaboration with the Treasury, also seeks to improve access to affordable financial advice and guidance.
Pritchard said: “The confidence to invest lags, because people so often don’t have access to the support they need.
“One of the reasons for that is firms’ fear of overstepping the line between guidance and personal recommendation.
“We want to see a continuum of help being offered to support consumers, without the cliff edge of the current regulatory framework.
“Much like the original Roman wall outside which has been adapted to suit different circumstances over the centuries, we are re-thinking the boundaries.”
She emphasised that no regulator has all the answers, and that working closely with Government, consumer groups, and industry would be vital to creating a regulatory regime that works for everyone.
The FCA has attended more than 30 industry events this year alone.
Pritchard encouraged firms to participate in consultations and sharing feedback.
In addition, she addressed the importance of clearer, more accessible information for consumers.
She acknowledged that current disclosure rules, particularly those related to the EU’s PRIIPs regulation, have not always provided consumers with the right information at the right time.
The FCA is working on more flexible rules tailored to the UK market that will better support retail investors; a consultation on these new rules is expected this autumn, with final regulations anticipated in 2025.
In closing, Pritchard urged firms to embrace innovation and be proactive in preparing for the future.
The FCA’s ‘digital sandboxes’ offer a space where firms can safely test new ideas and technologies, helping to drive forward the development of more accessible and affordable financial products.
Pritchard reaffirmed the FCA’s commitment to maintaining a thriving financial advice market, noting that while technological advancements are important, human advisers still have a crucial role to play.
Pritchard said: “The FCA’s mindset is changing.
“Our focus on supporting consumers continues, but we are evolving the way we do this by taking a more outcomes-based approach to regulation.
“This gives firms the flexibility to innovate in service of their clients. This will require collaboration.
“We have a solid foundation, and with the right mindset and tools, it is in our hands to build something remarkable together that will stand the test of time.
“Now is the time to act, to take some considered risk, and to shape the future.
“Opportunities don’t wait for those who hesitate; they reward those bold enough to seize them.”
