Funding our future: Building brilliant companies on the UK’s public markets

Introduction

It’s a pleasure to be here today. The title of today’s conference fits well with our recently announced 5-year Strategy[2]. We want to make sure there is a modern, healthy, thriving financial system that serves your needs, so you can get the capital to build brilliant companies. Driving economic growth and helping people build their long-term financial future.

We want to use this moment of regulatory reform to build a future proof, outcomes focused, system. This includes our approach to public markets. 

Helping companies seeking capital to find it more straightforward to list. A disclosure and prospectus regime that works for investors and for listed companies. One that is more intuitive. Underpinning it all, the determination to ensure our markets are clean and fair. 

The aim, as set out in our new strategy, is to:   

• Support growth.
• Help consumers navigate their financial lives.
• Fight financial crime.
• And deliver that by being a smarter regulator ourselves. 

We want to deepen trust, rebalance risk, support growth and improve lives.

How we have already improved

That means being proportionate, efficient and effective. Now, we’ve heard previous criticism that we were too slow. Too cautious. That we put up barriers rather than smooth out paths.

Under our previous strategy, we put our own operational efficiency front and centre. Speeding up our authorisations. Publishing metrics. And actively listening to the feedback we received from firms.

We’ve seen real results. In Q4 2024, 99.9% of SMCR approved person applications were processed within three months. Every single change in control application was decided within 60 days of being acknowledged. The result? Firms which are well-placed to help you in your capital-raising ambitions.

Becoming a smarter regulator

One of the 4 pillars of our new strategy is being a smarter regulator. 

We’ve heard the feedback from regulated firms that our rules are too lengthy and complex. Messaging is not concise enough. Our expectations not clear. 

So, we are building on the steps already taken to further improve.  Since our strategy launch 9 weeks ago, we have translated our intent to simplify into action. We are simplifying and consolidating regulatory capital rules for investment firms, which should result in a 70% cut in red tape. We’ve switched off 3 regular data collections that are no longer needed, benefitting an estimated 16,000 firms. We are looking to simplify conduct rules that apply to wholesale insurers. 

We’ve changed the way we communicate our priorities to firms. We are not relying on a blizzard of Dear CEO letters but instead using less frequent, more predictable communication. 

We’ve archived historic letters and will be doing the same with some multi-firm reviews. We want to be clear when older publications no longer apply, clarifying our expectations of firms. De-cluttering, working more smartly. 

On the consumer front, we are relying on the Consumer Duty[3] as much as possible rather than defaulting to rule writing. There will of course be some situations where new rules are needed to support government priorities – take Buy Now Pay Later[4]. But we’ll not make new rules if we don’t need them. Taking this approach has already stopped or reduced the scope of at least 3 new policy initiatives. With no need to wait for us to set out new rules, firms can innovate safely knowing what our expectations are. 

We’ve removed the need for a Consumer Duty board champion. We are clear that the Duty only applies to those who can have a material influence over retail consumer outcomes. We’ve asked stakeholders whether there are rules that are no longer needed in light of the Duty, or if the Duty is causing unnecessary friction. We are hosting a regulatory summit this side of the summer to explore this, and how we can change our rulebook to help firms innovate.

None of this involves compromising on the quality of our regulation. We will not accept sub-standard outcomes. One of the selling points of our financial sector is its commitment to high standards. That is not changing.

Innovating in the way we work

Being a smarter regulator is not just about simplifying the rule book. It is a fundamental mind-shift. A willingness to embrace new tech. To change the way we engage with stakeholders. Actively listening and experimenting with new ways of working – such as policy sprints to co-design new policy before rules are written. We’ve done just that in our landmark reform of financial advice. 

This approach and new ways of working will help us, and the market, stay bang up to date. Supporting innovation and growth. 

Our Digital Securities Sandbox[5] is up and running. Allowing firms to trial cutting edge technologies – and allowing us to switch off rules up to December 2028 to allow safe experimentation. Making markets more efficient, transparent, and resilient. 

We are working to operationalise the new bond consolidated tape – to provide investors with high quality data. Encouraging market activity. And helping unlock capital investment.

We are digitising our authorisations process. Reducing the need for follow-up requests. Increasing the quality of the information we receive. So that we can get those financial firms which will make the biggest difference in your business development at your door, sooner.

We are increasing direct contact points and support for firms. We had 146 applications in 2023/2024 for our innovation services. And 80 firms made use of our pre-application support services – all of those getting help before authorisation so they can get to market more quickly. 

We want to ramp up our firm engagement across the board. So that we can better guide, educate, and explain. Giving firms we regulate the top-notch service they need. We know it is not just domestic financial firms which support and invest in companies like yours.

It is international ones too. We’re enhancing our international focus. Putting our people in the Asia-Pacific region. Establishing a presence at the British Embassy in Washington. This means we can speak to investors interested in UK financial services companies and support UK firms who want to expand abroad. And build even deeper relationships with key international regulatory partners. 

We know that change and innovation is going to take all of us. We are up for innovation and doing things differently. Calibrating the UK rule set effectively and working smarter. Setting the right conditions to support future growth.

Growth and capital generation

In our new 22-page Strategy[6], growth is mentioned 30 times. This should be no surprise. We want to help make it easy for companies to raise capital in the UK, removing unnecessary frictions for investors (retail or institutional) so they can put their money to work.  

We want to take this moment of regulatory reform to help the capital in our system get to those who can marshal it most effectively. You’ve seen us already deliver difficult capital market reform. We have shown we are willing to prompt debate around re-calibrating the UK’s risk appetite. And we intend to keep building on this reform – to go further.

Last year, we implemented the biggest changes to our listings rules[7] in thirty years. Removing the old premium listing rules which disadvantaged UK-listed companies. Reducing the costs associated with prior shareholder approval for significant transactions. 

This was not easy. Some did not want us to go as far as we have. But we knew that our rules were constraining choice and undermining the UK’s competitiveness. 

Our listings reform has already had an impact. While it is too early to fully evaluate success by counting the numbers of new IPOs, we know that at least 23 significant transactions have been able to pass more easily since then. Improving the efficiency of our markets. And allowing those in the Boardroom to focus on running their companies. But we are not stopping there.

We are close to finalising our reform of Prospectus rules and will conclude this within weeks. Establishing a bolder approach where companies can make further issuance of securities without the need for a prospectus. Helping companies access a broader investor base. 

We are making it easier for corporates to issue smaller bonds. We’re launching a public offer platform which will make it easier for small growth companies to raise capital to scale up. All of this to help companies access a broader investor base. Alongside this we are working to support the creation of new markets – through PISCES[8]. And working to build a culture of retail investment through our landmark advice/guidance reform. There is plenty I could talk about, but I will save more for the panel.

The final piece in the puzzle – risk appetite

We’ve spoken about how we are changing. How the financial firms who support you are changing. And how the regime around capital raising is changing.

There is one final piece in this puzzle for unlocking the potential of public markets. And that is tolerance for risk and the UK’s risk appetite.

We know that – for far too long – we at the regulator have been seen as sheltering consumers. Of insulating people from risk. And focusing on the risks of a decision taken rather than the lost opportunity of taking none.

There is no such thing as no risk. We know that investors who don’t take risk lose out – on long-term returns, on good pension outcomes, on the funds to manage financial health throughout lifetimes. 

Which is why we want investors, where appropriate for them and where they wish to do so, to take some risk. To aid this, we are reforming the advice and guidance market so that people can access the help and guidance they need, at a cost they can afford, to make informed decisions about their finances. And to help support a greater culture of investment. But we should not – and do not want to - seek to reframe the UK’s collective risk appetite alone. 

There are differing views we know. But we are willing – and actively wanting – to prompt this debate. We are listening. We know that when we have fixed this pipeline – from investors to profitable firms and from consumers to innovative ideas – not only will we see businesses having the chance to profit and grow, but also consumers better placed to meet their financial goals. To have the resilience to withstand the bad days. And to navigate the entirety of their financial lives.