Background
The UK government as part of its overall growth plans for the UK economy has recently undertaken a significant review of the role that the regulators can play in increasing economic growth in the sector including the financial services regulators (the FCA and PRA). The previous government had begun this process through amendments to the Financial Services and Markets Act 2023 which gave the PRA and FCA a new secondary objective, which requires them to facilitate, subject to aligning with relevant international standards, the international competitiveness of the UK economy (including in particular the financial services sector).
Prior to the publication of outcome of that review the government had on a number of occasions signalled that it would be pushing those regulators much further than previously in searching for growth in the sector in particular in the Chancellors' speech to the Mansion House on 14th November 2024. This was followed by letters to the FCA and PRA on 24th December 2025 which set-out in greater detail the governments' desired approach for regulators amidst what was described as "A new approach to ensure regulators and regulation support growth".
In response to those letters both the FCA and PRA set-out in their letters in January 2025 their own revised approaches and also listed-out initiatives which they considered would support the new growth agendas. Subsequently on 17th March 2025 the UK government published a formal Policy Paper likewise headed "A new approach to ensure regulators and regulation support growth".
The three key actions the government has set-out for itself and for all regulators are:
- To tackle complexity and the burden of regulation;
- To reduce uncertainty across the regulatory system; and
- To challenge and shift excessive risk aversion in the system.
What has happened in the insurance sector?
The letters and the Policy Paper contain what are described as key regulator "pledges". The FCA has also in March 2025 published a Feedback Statement (FS25/2) on its plans for reviewing its Rulebook following the introduction of the Consumer Duty. For the FCA and PRA the following proposals/initiatives that impact the insurance market include:
- Working with HM Treasury and the FCA to review the Senior Managers and Certification Regime;
- Ensuring the timely handling of authorisation applications;
- Establishing a " concierge" system for overseas firms looking to set-up in the UK;
- Provide 50% more dedicated supervisors to early and high growth firms;
- Reducing conduct requirements for wholesale insurers by reviewing their international application and reviewing the scope of retail customer protections required to be offered to SME's;
- Clarifying the FCA rules on product governance and fair value and clarifying the application of the Consumer Duty through distribution chains;
- Consulting on removing specified minimum training and development hours for employees.
What can you do to respond to these initiatives?
The current political growth-focussed environment in the UK means that there is likely to be real change in the regulatory landscape. More importantly regulators will be open to receiving proposals from the insurance market to address areas where both the retail and commercial markets consider there is excessive or burdensome regulation.
This is an opportunity for insurers, brokers and market participants to have their views heard by the regulators and to seek to influence how the market is regulated in the future.
To find out more please contact Jonathan Drake
