Cabinet minister without portfolio Oliver Letwin says the Financial Conduct Authority faces a “daunting” task to regulate the industry without stifling innovation.
Speaking at the Association of British Insurers’ biennial conference today, Letwin said it is “very difficult ” to strike the right balance between the two and a “never-ending” battle for the regulator.
The Conservative MP said: “You need to make sure you are regulating things very tightly that are in the public interest and not over-regulating the things that are actually innovation and competition.
“Striking that balance is a never-ending task and one of the most daunting tasks facing regulators is how to deal with innovation.”
Letwin said financial services regulation must move much faster than in other sectors, presenting a difficult task for the Financial Conduct Authority and Prudential Regulation Authority.
He said: “If you take something like peer to peer lending, it is not even on the radar of regulators because they just haven’t got used to something which has sprung up very quickly.
“There is a particular challenge between encouraging innovation and regulating very tightly that which needs to be regulated. It is a very, very difficult balance, especially in financial services.”