Press reports have indicated that the UK's Chancellor of the Echequer, Rachel Reeves, wants regulators to take more risks and cut back on overly cautious rules that are hindering economic growth.
Apparently, there is to be a meeting this Thursday when she is talking to the heads of the UK's biggest regulatory bodies, including the FCA and the CMA. She wants them to outline their plans for boosting growth in their respective sectors by reducing red tape and opening up markets to new players.
Before Christmas, Reeves sent a letter to sixteen UK regulators, giving them until this Thursday to come up with plans to make their sectors more growth and investment-friendly (we've heard this before). Reeves has reportedly called the meeting to hear their plans first hand and to challenge those that aren't ambitious enough. The biggest complaint Reeves hears from business groups is about regulatory red tape, and so she wants to address their concerns. The timing is because Reeves is due to give a speech in two weeks.
Ministers aim to reduce some of the regulatory reporting burdens on financial services firms and make it easier for emerging sectors like cryptocurrency to thrive in the UK. However, the FCA has cautioned against returning to the pre-financial crisis era of "light touch" regulation, warning that it "ended in tears."
The CMA has been on the receiving end of accusations about stifling growth by taking an overly cautious approach to regulation. Ministers want the CMA to carry out its investigations more quickly, as well as letting mergers take place if they are likely to boost productivity, like the one between Vodafone and Three. The CMA received criticism for its handling of the Microsoft/Activision transaction.
With exquisite timing, the CMA has issued its annual plan for consultation with the tagline "Growth, opportunity, and prosperity". According to the CMA, the plan sets out how the CMA's work will help to drive greater innovation, investment and productivity growth, with benefits that are diffused and sustained across the economy. It has also established a new Growth and Investment Council, bringing together senior leaders from a wide range of UK business and investor representative groups, to help identify opportunities for competition to unlock growth and investment.
However, among other things, it says "Broadening our work to protect consumers from misleading or high-pressure online sales and pricing practices – including using new consumer enforcement powers introduced by Parliament". We have written before about our concerns regarding the CMA's new pricing guidance, which is currently aimed at the online mattress sector but is intended to reflect the CMA's future approach to most online sales.
In particular, we and our clients have strong concerns over the newly-invented and overly burdensome 'volume requirement'. Gilding the DMCC and imposing its own pricing rules on businesses, which potentially conflict with ASA rules and go beyond any other market, around the time new consumer law comes into, force isn't going to help drive growth. This seems like exactly the kind of overly strict, excessively burdensome and impractical interpretation of the rules that the Chancellor has in mind!
It could also have an impact on the CMA's current consultation on its updated 'unfair commercial practices' guidance: Spotlight on unfair commercial practices - CMA consults on updated guidance
