The UK has failed to drive an investment culture, according to City minister Emma Reynolds.
The MP told the House of Lords Financial Services Regulation committee a risk averse attitude has led to a lack of investment in the UK.
She said: “There is a recognition that by seeking to eliminate risk, for example why have we got hundreds of billions of pounds in cash Isas, we have failed to drive an investment culture that we see in other places.”
She said a new investment culture is needed in the UK that “realises cash is not a good investment”.
Reynolds added: “We are starting to have a discussion with the regulators and with you and with others about how we can create an investment culture.”
She stressed the government “cares about consumer protection” but still wanted to see a change in approach to risk.
“We can’t strip out that risk entirely, and we should not try to, but we also don’t want to see a system where there are bad actors and bad practice,” said Reynolds.
“Please don’t think that I am coming here with no regard to consumer protection. What we are saying is the risk must be proportionate to the actors that we are talking about. So, do sophisticated investors need the same kind of protection as a retail investor?”
Reynolds said in practice, “recalibration” includes asking the Financial Conduct Authority to look at duplication of rules across regulations.
tara.o’connor@ft.com
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