Cutting red tape could attract more bad actors in finance sector, says FCA boss

The boss of the UK financial regulator has warned it will not “be able to stop everything”, amid concerns that plans to cut red tape will encourage bad actors.

Financial Conduct Authority (FCA) chief executive Nikhil Rathi told MPs on the Treasury Select Committee that there will be increased risk-taking as part of proposed changes by Government.

Chancellor Rachel Reeves pledged last month rip up financial red tape, saying that regulatory changes after the 2008 economic crash have “gone too far,” in a speech at Mansion House.

Mr Rathi said: “If you are going to allow more risk into the system, sadly, in the financial services industry it can attract people that don’t have the best of intentions.

“And we are not going to able to stop everything.”

The Chancellor called on regulators, including the FCA, to push for a greater focus on growth, to boost the economy over the coming years.

Mr Rathi also said on Tuesday that its shake-up of UK listing reforms, designed to help drive more activity in the markets, could lead to some failures.

He added: “This was a very lively debate, but all the way we have said very openly that more things will go wrong over time.

“I don’t know when, but one or two things will go wrong and that is necessary to shift the risk appetite that the economy needs for growth.

“The test will come when those things do happen and what the tolerance here is in Parliament when they crystalise.”

Consumer groups warned the FCA earlier this month that prioritising growth could do more harm than good for ordinary people.