Conservative leader hopeful Liz Truss is planning to merge the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and the Payment Systems Regulator (PSR) into a single body, should she become the next Prime Minister.

Truss, who is the favourite in the Conservative leadership contest ahead of Rishi Sunak, would oversee an immediate review of the regulators’ roles and responsibilities if she wins, a report in The Financial Times has revealed.

According to those close to Truss inside her campaign, the foreign secretary has been “privately critical” of the FCA, and wants to see an overhaul of financial regulation as part of a “wider war on technocrats” as well as civil servants.

The FCA, which has more than 4,000 staff, oversees the conduct and financial stability of around 60,000 financial services companies, while the PRA, which sits within the Bank of England, has 1,350 staff who are responsible for protecting the financial health of banks and insurers operating in the UK. The PSR is the smallest of the three organisations outlined for a review, and is a subsidiary of the FCA with around 130 staff.

Truss has not publicly commented on the proposals, although The Financial Times did report that one campaign insider has confirmed her intentions to review the three organisations.

Commenting on the rumoured proposals, head of retirement policy at AJ Bell, Tom Selby, said: “The FCA, PRA and PSR all play slightly different roles in the UK regulatory system, so it will be important any merger maintains the key protections each individual regulator is currently responsible for.

“The former city regulator, the Financial Services Authority (FSA), was carved up in the aftermath of the financial crisis. Reversing that move to bring regulatory powers under one roof again would be a major undertaking.

“There is arguably a stronger case for folding at least some of the responsibilities of The Pensions Regulator (TPR) into the FCA. From an end saver’s perspective, there is often very little difference between a trust-based pension, which is regulated by TPR, and a contract-based pension, regulated by the FCA.

“While TPR and the FCA often work together, they continue to set rules independently. Having two regulators for what is essentially the same product carries the constant risk of inefficiency, with rules either duplicated or applied in different ways.”

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