Polling shows UK public oppose financial services deregulation in Financial Services and Markets Bill

Polling commissioned by the Finance Innovation Lab, an independent organisation, found that 66% of a representative sample believed the existing level of financial services regulation needed to be increased or was about right, while 9% believed banks and other financial institutions needed less regulation¹. The findings were published on 6 September 2022, ahead of the second reading of the Financial Services and Markets Bill in the House of Commons¹.

The bill would delegate powers to the Financial Conduct Authority and the Prudential Regulation Authority, and the government proposes giving regulators a statutory objective to promote the "international competitiveness" of the UK financial services industry, meaning the ability of UK firms to compete for business overseas¹. The Lab states that this is distinct from competition, which regulators already have an objective to promote¹.

Support for deregulation was lower among some groups: 8% of those who voted Conservative in the 2019 general election, 5% of those who voted Leave in the Brexit referendum and 6% of those living in the North of England¹. On the risk of another crash, 72% said they would be fairly or very worried about their personal financial position, 2% were not worried at all, and concern was highest among those aged 50 to 64 at 78%¹.

The Lab points to the 2007/08 financial crisis, which it says cost the UK an estimated £1.8 trillion in lost GDP¹. It says HM Treasury identified in 2010 that one of the reasons for regulatory failure leading up to that crisis was "excessive concern for competitiveness", and that parliament removed competitiveness from the financial regulator's mandate a decade ago¹.

In February 2022 the Lab and 36 other public interest groups published a joint statement with recommendations to strengthen the government's proposals¹. The Lab says it is calling for regulators to be given new duties to align the financial system with the 1.5 degrees goals of the Paris Agreement and to promote financial inclusion, alongside greater parliamentary scrutiny of rule-making and more transparency around lobbying¹.

Why it matters for households

The bill sets the framework for how banks and building societies and other firms are authorised and supervised, and how consumer protection rules are made and enforced by the Financial Conduct Authority¹. The proposed competitiveness objective would sit alongside regulators' existing duties, and the Lab argues it could pressure regulators to water down standards or remove regulations¹. The polling indicates that a majority of those surveyed did not support less regulation, and that most would be worried about their own finances in the event of another crash¹. The figures cover the sample surveyed and do not set out what will change for individual products or firms.

What happens next

The second reading of the Financial Services and Markets Bill in the House of Commons was due in the week beginning 5 September 2022, the same week a new Prime Minister took office and Parliament returned¹. The Lab says it is working with civil society organisations to seek improvements to the bill as it passes through parliament¹. No further parliamentary dates are given in the source.