U-turn on FCA / PRA merger?

After the government’s reversal of its plan to lower the top rate of tax, and rumours of further backtracking on index-linked benefits, is it too much to hope that another Liz Truss suggestion bites the dust?

As part of her bonfire of the regulations, Truss had been said to be looking to merge the Financial Conduct Authority, Prudential Regulation Authority and Payments Systems Regulator into a new body. Why? Not so much because of perceived failings over scandals such as the London Capital and Finance minibond collapse but as part of a “wider war” on technocrats and civil servants and a desire to give the PRA and the FCA a “secondary mandate” to further growth.

Rishi Sunak’s campaign criticised the proposals as “ignoring the lessons of the financial crisis”. One campaign insider accused the foreign secretary of “recreating Gordon Brown’s failed regulatory model”. And former business secretary Vince Cable slammed the proposal as “dangerous”.

For regulated entities the proposal also spelt further change and disruption in a regulatory environment that is already quite complicated enough. In addition it implied job losses at a time when regulators are finding it hard to hire and retain staff and resource constraints are at the heart of those regulatory failure.

No surveillance professionals contacted by 1LoD were prepared to comment openly, but a recent private 1LoD poll made grim reading for Truss and her team. Just 7% thought her elevation to prime minister was “good news”. Since her regulatory idea was floated well before she was made PM, can we presume the market was making at least some comment on it?

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