The cross-party House of Lords Industry and Regulators Committee on Tuesday said regulators need clearer direction from government on how to balance growth objectives against responsibilities such as consumer and environmental protection, while also improving the speed and certainty of decision making.

“The Government says economic growth is its number one aim and wants regulators to help facilitate this,” said Baroness Hayter, chair of the committee. “Our inquiry found that, for this to happen, Government itself must take difficult decisions on how regulators should balance economic growth with the protections that citizens and the environment rely on, and the levels of risk to which the public should be exposed.”

She added: “Regulators must play their part by performing their functions more effectively, providing the speed and certainty businesses need to make investments, and the flexibility to respond to innovation.

“If growth is the government’s priority, it must provide clarity to regulators about its expectation and the political coverage for them to be less risk averse. The time to act is now.”

The report, titled “Time is money: How regulators can support growth”, said businesses were facing delays and uncertainty that increased financing costs and made the UK less attractive relative to competing jurisdictions.

It added that there remained “a significant gap between this high-level ambition and the reality faced by regulators and businesses on the ground”.

Regulatory uncertainty and risk appetite

The committee urged the government to provide what it described as “political cover” where regulators are expected to take a more flexible approach to risk in support of innovation and growth.

Peers said regulators had become increasingly risk averse because they faced greater scrutiny for failures than recognition for enabling investment or innovation.

The report warned this could create barriers for emerging technologies and new business models even where additional risks were limited.

The committee also called for legislation to ensure regulatory frameworks can adapt more quickly to new technologies, products and services, including through a potential Regulatory Reform Bill.

The findings come amid broader debate over the UK’s competitiveness as policymakers seek to attract investment in areas including financial technology, digital assets and artificial intelligence while maintaining consumer protections and financial stability safeguards.

The report also questioned whether strengthening the existing Growth Duty alone would materially change regulatory behaviour. While the government is considering reforms to place regulators under stronger obligations to support growth, the committee said clearer strategic guidance and operational reforms would also be required.

Sandboxes and regulatory reform

The committee urged regulators to reduce internal delays, engage more proactively with industry and expand the use of regulatory sandboxes to test innovative technologies and business models.

It also backed wider use of lead regulator models and “single front door” approaches for projects involving multiple regulators, arguing that fragmented oversight was slowing decision making and increasing complexity for firms.

Alongside legislative reform, peers said the government should improve accountability measures for regulators and develop clearer performance metrics linked to the speed and outcomes of decision making.

The report criticised the government’s focus on reducing administrative paperwork costs, warning ministers were concentrating on “the smaller cost of paperwork rather than the larger cost of actually complying with regulation”.

The report comes as UK regulators continue reviewing how existing frameworks should adapt to technological change and evolving market risks. In March, the Prudential Regulation Authority (PRA) said post-crisis liquidity rules no longer fully addressed risks exposed during the 2023 banking turmoil and the growth of digital banking.

In February, firms told the Bank of England that traditional “human-in-the-loop” oversight models and model validation frameworks were becoming harder to sustain as generative and agentic AI systems move into core financial services processes.