If the government wants to loosen financial regulations, it must also be prepared to answer just how much wrongdoing is it prepared to accept in the pursuit of growth, writes Lucy McNulty, editor of Following the Rules, in today’s Notebook

Regulators need a clearer mandate on risk

Chancellor Rachel Reeves kicked off a long-anticipated deregulatory drive in July, unveiling several reforms aimed at making the UK the most dynamic financial centre in the world.

The ambition to boost competitiveness is undoubtedly welcome. But attempting to achieve it through a sweeping overhaul of the financial rulebook risks distracting regulators from longer-term vulnerabilities quietly building in the system.

Mark Watson, a former senior executive at Silicon Valley Bank (SVB), recently told the Following the Rules podcast that regulators are being stretched too thin to supervise markets with the rigour required.

To counter that, he wants a more “anticipatory” model of supervision, where watchdogs proactively challenge financial leaders before cracks form. After all, SVB quadrupled in size in just four years. But its risk controls didn’t keep pace, and neither did regulatory scrutiny. We all know how that ended.

To be sure, Reeves has called for more “strategic”........

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