There was a distinct whiff of change in the regulatory air this week with the FCA rapidly jettisoning plans which would have seen more rules and regulations added to its handbook.

It is almost as if someone has hit the brakes.

Certainly Labour is now taking strides to scale back regulation, red tape and quangos at a rapid rate. I suspect NHS England staff were more than a little surprised by the surprise abolition of their employer announced by PM Sir Keir Starmer unexpectedly this week.

I just hope the government does not do anything as stupid as contemplate abolishing the FCA. I don’t think that’s on the cards but with news that the Payment Systems Regulator will be scrapped and other cutbacks likely , anything is possible.

I think the most likely scenario is that the Labour government will continue to push its anti-red tape policy and efforts to cut back on over-regulation to spur growth, but there will be at least some common sense applied.

It’s worth reviewing what the FCA has done this week alone, a hectic week for red tape cutbacks.

First the FCA dropped, or more accurately scaled back, its name and shame plans. These would have seen regulatory investigations potentially disclosed at an early stage to warn consumers that a company was being probed. The plans incurred a hail of criticism from the industry, concerned about the damage they could do to corporate reputations.

Then, on the same day, the FCA quietly dropped its plans to introduce formal rules on diversity and inclusion, perhaps a nod to the wave of anti D&I sentiment sweeping the USA from some quarters.

This caught some people by surprise. For those pushing for better standards on diversity and inclusion in the UK it will come as a disappointment.

It certainly means that for the time being at least any regulatory efforts to improve diversity and inclusion have been mothballed.

In other moves, the FCA also clarified that investment in defence industries was not automatically excluded from ESG investments. Given the likelihood of more defence spending this may have cheered some in the investment community.

The FCA has, of course, also dropped recently the requirements for boards to have Consumer Duty Champions and indicated it may review some of the more onerous requirements of the Consumer Duty.

Taken together these changes mark a new trend, a move towards reducing the regulatory burden on firms and doing more to encourage competition and growth by scaling back unnecessary rules.

To be fair, with initiatives such as its regulatory sandbox and other ideas the FCA has done quite a bit to encourage growth and innovation but the government clearly wants more. It also wants to halt the seemingly inexorable desire to introduce more rules.

Regulation has grown like topsy over the past 10 years and it was inevitable it would reach a peak. We still haven’t really seen the dividend from Brexit either.

So have we reached peak regulation? Probably. Will there be further reductions to red tape and quangos? Probably.

Is all this good for consumer protection? Only time will tell.

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days.  Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Follow @FPT_Kevin 

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