FCA’s Competitiveness Objective Misses the Mark on Growth, Survey Reveals Industry Concerns
The Financial Conduct Authority (FCA) may be making strides to support UK growth, but new findings from the FCA & Practitioner Panel Survey 2023-24 suggest that its recently adopted their Secondary International Competitiveness and Growth Objective (SICGO) currently lacks the impact needed to position the UK as a global financial hub.
Introduced under the Financial Services and Markets Act 2023, the SICGO was designed to help the UK compete internationally, promoting growth across the financial services sector. But the survey reveals a lukewarm reception among industry players, who cite modest improvements with plenty of room for more substantive change.
For a regulator aiming to ensure the UK’s future in an increasingly competitive global marketplace, these results may be a signal that more ambitious measures are necessary.
A Modest Step Towards Global Competitiveness
The FCA’s SICGO was established to boost the UK’s attractiveness as a financial services hub. Unlike the FCA’s primary objectives—market stability, consumer protection, and integrity—their SICGO is a growth-oriented goal, meant to create an inviting regulatory landscape for international business.
This secondary mandate is tasked with fostering global competitiveness and spurring growth within the UK financial sector. Yet, while their SICGO lays the foundation for a pro-growth agenda, the Practitioner Panel Survey reveals that financial firms feel the objective has yet to truly distinguish the UK as a leader in international finance.
The FCA & Practitioner Panel Survey, available on the FCA website, shows that firms acknowledge recent improvements, but confidence in the FCA’s commitment to making the UK competitive remains moderate at best.
Initial Measures and Industry Reception
The FCA’s initial efforts to embed their SICGO have focused on improving operational efficiency, enhancing innovation support, and overhauling the UK’s listing rules. But industry feedback suggests these measures may not be enough.
Operational Efficiency Gains: The FCA has touted its improved processing times, as shown in the Q1 2024/25 Authorisations Operating Service Metrics. Processing nearly 98% of applications within statutory deadlines has been a notable success, aimed at providing firms with faster, more predictable authorisation processes. However, survey respondents appear underwhelmed, with many pointing out that while speed is essential, it doesn’t replace the need for a more substantive growth strategy.
Digital Innovation: A Good Start, but Needs Expansion: To support innovation, particularly in fintech, the FCA has launched a permanent digital sandbox. Designed to allow companies to experiment within a regulated environment, the sandbox has reportedly helped participant firms secure up to 15% more funding than non-participants, according to the FCA’s SICGO report. However, the industry response remains mixed, with firms comparing the UK unfavourably to jurisdictions like Singapore, which not only offers sandboxes but also substantial financial incentives and expedited regulatory pathways. For the UK to become a true fintech powerhouse, firms are urging the FCA to expand its innovation initiatives.
Listing Rules Overhaul: The FCA’s July 2024 reform of the UK’s listing rules, which consolidates the ‘premium’ and ‘standard’ categories, was meant to simplify the listing process and reduce regulatory burdens. While a step in the right direction, many firms feel the change does little to make the UK a preferred listing venue compared to larger markets. Respondents argue that, in the absence of more aggressive incentives, companies will continue to favour other financial centres.
A Call for More Ambitious Regulatory Support
The Practitioner Panel Survey also reflects a demand for the FCA to adopt a more adaptive and growth-friendly approach to regulation. While operational gains and streamlined processes have been positively received, firms want to see a regulator that actively incentivises growth and embraces new market dynamics.
Enhanced Support for High-Growth Sectors: Industry feedback consistently highlights a desire for the FCA to target growth areas with tailored support. For instance, adding financial incentives or introducing tax relief for high-tech sectors could create a more attractive regulatory environment. Firms are also calling for the FCA to establish fast-track authorisation channels for priority sectors.
Growth-Centric Performance Indicators: While the FCA has achieved timely authorisations, many feel that regulatory metrics should go beyond statutory deadlines and include broader growth indicators. Metrics reflecting the UK’s ability to attract foreign direct investment, increase international listings, or drive sectoral expansion could provide a clearer measure of SICGO’s success in promoting competitiveness.
Cross-Border Collaboration for Broader Market Access: A further recommendation from the industry is for the FCA to consider bilateral agreements with other key financial markets. Regulatory alignment initiatives, particularly with the EU and US, could make it easier for firms to operate across borders, a feature that many view as essential for competing in the international arena.
Room for Improvement: How the FCA Can Leverage their SICGO
With feedback from the Practitioner Panel Survey highlighting industry concerns, the FCA is in a strong position to act. Here are some potential ways it could enhance SICGO’s impact:
Expand and Scale the Sandbox: By increasing the scope of the digital sandbox to accommodate more companies and by offering additional incentives, the FCA could improve its standing as a fintech-friendly regulator. Broader eligibility and a focus on mentorship, investor access, and networking opportunities would provide stronger support for high-growth firms.
Introduce New Growth-Focused Incentives: Many firms point to the need for growth-centric regulatory incentives. Tax breaks, reduced compliance fees, or preferential processing times for select high-growth industries could make the UK a more attractive market for expanding companies.
Launch Targeted Marketing of the UK’s Financial Services Sector: Promoting the UK’s financial landscape abroad could be another way to strengthen its competitive edge. While this falls outside of regulatory measures, proactive international engagement could position the UK as a preferred location for firms considering expansion.
Conclusion: An Opportunity for Transformative Growth
The Practitioner Panel Survey results are clear: while the FCA has made progress under their SICGO, firms expect more. As it stands, the FCA’s measures reflect a modest but limited commitment to growth and international competitiveness. In a global financial market that continues to innovate rapidly, the UK risks falling behind unless it embraces a more ambitious approach to regulation.
If the FCA is to fulfil it’s SICGO’s potential and truly boost the UK’s financial standing, it must go beyond operational improvements and explore bold, growth-centric initiatives. With increased support for innovation, new incentives, and proactive international alignment, the FCA can move from average to exceptional, ensuring that the UK remains a global leader in financial services for years to come.
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