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Strengthened coordination between UK financial services regulatory authorities has been put at the heart of a revised Memorandum of Understanding (MoU) between the parties.
Senior representatives from four regulators – the Bank of England, the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA), and the Payment Systems Regulator (PRS) – reviewed the MoU, consulting with firms, trade associations, consumer groups and members of the Vision Engagement Group ahead of the revision.
The authorities said the update to the MoU directly supports the development of a resilient, safe, well-operating payments sector, while also promoting competition, innovation, and economic growth in the UK.
In a joint statement, they said: “As set out in the NPV [National Payments Vision], the revision of the MoU provides an opportunity to strengthen coordination between the Authorities. This helps us deliver a more efficient and effective regulatory environment, as well as manage our collective impact on regulated firms.”
The MoU does not just have a strictly regulatory focus, but also indicates that its role is a supportive one for firms intending to expand their offerings.
“Where appropriate, the authorities will cooperate to support firms looking to offer new and innovative products and services, such as via the FCA’s Innovation Hub”, it said.
Underpinning their commitment to greater coordination, the authorities agreed to five principles: clarity of roles and responsibilities, a holistic approach to areas of common regulatory interest, cooperation in the exercise of relevant functions, exchange of information and ongoing review.
They also agreed that details of each authority’s regulatory remit would be updated at least annually.
The statement added that the update to the MoU “also reflects the growing collaboration between the FCA and PSR ahead of the planned consolidation, reinforcing our shared commitment to a joined-up regulatory approach.”
With the PSR’s functions set to be taken on by the FCA, the revised MoU reflects the growing collaboration between the two regulators.
Growth agenda
The MoU’s focus reflects the UK government’s commitment to the payments and fintech sector, which it regards as central to its ambitions for boosting economic growth.
A key concern for policymakers and industry representatives is achieving the right balance, with regulation that supports rather than hinders growth in the payments industry, while also protecting consumers and preventing fraud.
There has also been criticism of UK financial regulators for their perceived timorousness.
In June, as covered by Vixio, a House of Lords committee warned that UK financial regulators may be undermining the country’s ambitions for economic growth due to a pervasive culture of risk aversion, uncertainty, and inefficiency.
In its report Growing pains: clarity and culture change required, the House of Lords Financial Services Regulation Committee noted that despite the introduction of a new secondary objective to promote growth and competitiveness, the FCA and PRA are being held back by an overly cautious approach to risk.
It remains to be seen whether the new MoU will lead to a more confident, less risk-averse approach on the part of the UK financial services regulators, but such an outlook may be necessary if they are to achieve their growth objective.
