The Financial Conduct Authority (FCA) is set to encourage retail investors to up their level of risk when managing their savings, as part of its mandate to support growth in the UK economy.

The watchdog has drawn up the plans as part of a new five-year strategy that is set to launch later this week, FCA chair Ashley Alder told the Financial Times.

Pushing investors to look towards a “rebalancing of risk” is expected to be a key part of the strategy, which Alder described as “the risk of not deciding to, for example, participate in or access financial products or services that can lead to greater long-term returns”.

The comments come as Chancellor Rachel Reeves and Keir Starmer press regulators to prioritise growth amid concerns that red tape is hamstringing the economy.

Labour made slimming down the financial rulebook a key part of its pitch to the City ahead of the election and Reeves has taken aim at the burden of financial rules since taking office. 

In her maiden speech to the Square Mile in November, she said post-financial crisis rules had “gone too far” and were now hamstringing growth.

Meanwhile, in 2023, the FCA was assigned a secondary growth and competitiveness mandate while maintaining its primary objective of protecting consumers.

The watchdog has occasionally struggled to balance the two objectives, but it has pursued both through methods such as opening fewer investigations to concentrate resources on “cases that present the greatest risk of harm,” said Alder.

However, the FCA chair argued that the pro-growth plan would not mean providing less protection for consumers.

“It isn’t an exchange, or an either/or, of consumer protection or growth,” he said. “We want to supply retail consumers with far better tools to do this thing that is informed risk-taking.”

Through making “a heavy emphasis on financial crime and fraud across the sector,” the watchdog can increase confidence in investing and therefore allow consumers to up their risk, Alder explained.

“If you were able to increase the trust in the system and therefore increase the level of participation in products and services, clearly you would then end up with a greater level of savings being converted into investments via markets,” he added.