UK Finance has outlined key reforms in its ‘Plan for Growth’ initiative to help the financial sector continue to play a role in driving the government’s economic agenda.
Prime Minister Keir Starmer has emphasised the sector’s importance, naming payments and fintech in helping to drive revenue for the economy. He has also been vocal about the risks of over-regulation and started cutting red tape to encourage growth last week.
UK Finance’s plan was submitted to the government earlier this month and aligns with these ambitions. It outlines key actions needed to create a pro-growth environment, secure the financial sector’s future and expand services for consumers and businesses.
David Postings, Chief Executive of UK Finance, commented: “Financial services are integral to our economy and to ensure the UK remains a world-leading hub, it needs a regulatory and tax framework that encourages innovation and investment.
“The current discussion about what more regulators could do to support growth and the very constructive way in which they have responded has created the space to consider further reforms.
One of the first major regulatory changes under this initiative was the axing of the Payment Systems Regulator (PSR), with its responsibilities now merging with the Financial Conduct Authority (FCA).
According to UK Finance, this was a move it advocated for, alongside other key developments that have already taken shape.
These include the FCA abandoning plans to publicly name firms under enforcement action, choosing instead to retain its existing ‘exceptional circumstances’ test and the government launching a review into the Financial Ombudsman Service to address concerns over its role as a quasi-regulator.
Beyond these initial steps, the Plan for Growth also calls for a proportionate regulatory framework for cryptoassets and a clear long-term strategy for Open Banking – something that mirrors similar discussions in the US and Canada.
These changes are designed to ease regulatory burdens, encourage competition and make the UK a more attractive destination for investment. So far, the government’s approach has been welcomed across Parliament and various industries.
The financial sector has particularly shown appreciation, with the majority of institutions long-criticising the number of regulators they must report to as timely and costly.
However, Postings has warned that while reform is necessary, the government must be “careful but decisive” in shifting from risk-heavy regulation to a more forward-looking framework.
“We need a careful but decisive move away from regulating for risk, and towards a more modern regulatory framework and internationally competitive environment,” he concluded.
“We have already seen the government and regulators announce action in line with our tasks and I hope more of the ideas we have set out are taken forward to support growth and benefit consumers and businesses up and down the country.”
