Britain's financial regulator has lashed out at Sir Keir Starmer's pro-growth policies, warning his plans to deregulate will lead to more failures and harm consumers.
Nikhil Rathi, chief executive of the Financial Conduct Authority, told the Prime Minister that its pledge to remove mortgage and anti-money laundering check rules would only work if there was a "sustained acceptance" by the government that "we need to prioritize resources". And there will be failures”.
Lartie told Starmer in a letter released on Friday calling on the regulator to provide "indicators of tolerable failure": "We will not stand in the way when making risk-based choices about the cases and intelligence we pursue. All hurt."
Responding to calls for more pro-growth measures from the government, Ratti said regulators would consult on lifting some restrictions on banks' riskier mortgage lending in response to deep losses from the 2008 financial crisis, when many banks were under pressure. State bailout.
He said the FCA could "go further" and relax anti-money laundering requirements to require firms to carry out customer identity checks on small transactions.
The letter, also sent to Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds, pledged "deep reforms" to make economic growth "a cornerstone of our strategy to 2030".
The government last month called on the FCA and 16 other British regulators to put forward ideas for rule changes to increase risk-taking and investment in the economy, as Starmer seeks to deliver on his promise to boost growth - a core mission of his government.
The Treasury Department did not immediately respond to a request for comment.
The Treasury said Reeves would review the regulator's proposals after the Financial Times earlier reported that the FCA had proposed allowing banks to issue more mortgages to first-time buyers with smaller savings and lower incomes. and work closely with them to further refine these proposals.
The FCA last year proposed a series of growth-boosting measures to make it easier for companies to list, relax banker pay rules, remove disclosure requirements for investors and simplify its 10,000-page rulebook.
Other proposals in Rathi's letter include plans to reduce reporting requirements, which he said would benefit 16,000 companies, and allow startups to partially launch before meeting all requirements for full authorization.
Rob Hailey of hedge fund trade body MFA welcomed plans to reduce trading reporting requirements for asset managers, calling it "duplicate and onerous".
The FCA has said it may increase the £100 spending limit on contactless card transactions, which was imposed due to concerns about fraud but already does not apply to contactless payments made via mobile phones.
The regulator also said it would "begin to simplify rules for responsible lending and mortgage advice, support home ownership and initiate discussions on the balance between lending access and default levels".
UK mortgages are controlled by a mix of FCA and Bank of England rules. They limit how much banks can lend to a multiple of a person's income or property value and require affordability tests to check whether borrowers can cope with future interest rate increases.
The idea of easing mortgage rules was welcomed by Charles Roe, head of mortgages at trade body UK Finance. "A review of mortgage rules will help address affordability issues, not just for first-time buyers but for those looking to move further up the housing ladder," he said.
Richard Donnell, executive director of property portal Zoopla, said a "big barrier" preventing more people from getting mortgages was affordability stress tests, which require banks to test whether borrowers can cope with the cost of borrowing. rise.
"This comes at the expense of taking more people out of the market," Donnell said, adding that before recent interest rate increases, lenders typically stress tested whether borrowers could afford rates of about 6 percent, while Interest rates have risen. As high as 8-9%.
But Sir Vince Cable, the former Lib Dem business secretary in the 2010-2015 coalition government, said relaxing mortgage requirements could be risky.
"This seems to have ominous similarities to the trend from two decades ago, which was Northern Rock's crazy 125 per cent mortgage lending and self-certification, which did not end well," he said. “Even if there are no systemic risks, this will increase demand in the absence of supply – and we know where that leads.”