The drive for economic growth and innovation has trade-offs, with the potential for “one or two more things” to go wrong, a City regulator boss has told MPs.

Nikhil Rathi, chief executive, Financial Conduct Authority (FCA), was giving evidence to the Treasury Committee, as the regulator published some initial thoughts on potentially simplifying some of its rules.

Mr Rathi said there should be a “good healthy debate” around the benefits and risks of growth and innovation.

He also highlighted the broader benefits that economic growth could bring to people and businesses, in supporting long-term financial wellbeing.

The UK Government has put a strong focus on economic growth, including looking at ways for regulators in general to work more efficiently.

Mr Rathi told the hearing there is a “good degree of alignment” with Government ambitions for regulation.

He said the FCA is “always going to be anchored to the primary objective that Parliament has given us. You’ve given us primary objectives around consumer protection, market integrity and competition in the interests of consumers and you’ve asked us to pursue growth and competitiveness insofar as we can also deliver those primary objectives.

“So that will always be our anchor. And what we’re saying is we entirely recognise that we play a role in different ways in supporting growth.”

He continued: “In all of this what we want to do is have a good healthy debate about the risk and the trade-offs so that there’s a good understanding that with the potential for innovation, opportunity and growth, one or two more things may go wrong.

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“And we’re not going to be able to stop everything, but that might be a price worth paying for the broader benefits to society and the economy.”

Put to him that a de-regulatory approach and economic growth could lead to more consumer harm, complaints, fraud and insolvencies, Mr Rathi said: “What I’m saying is there are choices here and we need to have an open evidence-based debate around those choices.”

The FCA is looking at its expectations for mortgage lending as part of proposals to streamline its rules, as well as how communications about savings accounts can be simplified and reviewing lengthy terms and conditions in credit advertising rules.

Talking about plans to relax rules to help more people onto the property ladder, Mr Rathi said: “We intend, subject to consultation, to enable more first-time buyers to come into homeownership.

“We can’t do that at the same time as saying there’ll be less defaults. There’s a choice there.”

He also said the regulator could look at modifying some financial crime controls to be more proportionate, adding: “But in doing that we can’t guarantee that one or two more money mules aren’t going to get through the system.”

Mr Rathi added: “I am saying that if we want to support innovation, growth and generate these benefits, let’s have a debate about what the potential risks may be.

“And I think we’ve always struggled to some extent at the FCA (in) having that debate and I’m really grateful that the committee’s giving us an opportunity to surface some of this now.”

Asked by the committee who growth is for, Mr Rathi said: “Ultimately, it’s for all of our citizens and businesses. We have to face the fact that since 2012, the productivity gap between the United Kingdom and the United States has more than doubled.

“And that has impacts on wealth generation and that has impacts on living standards and … we have to test ourselves, are we really delivering our consumer protection objective in the long term if we aren’t openly facing into the fact that consumer protection in the short-term might undermine financial wellbeing in the long-term.

“You see that for example in terms of investment in pensions, where we perhaps have a lower-risk overall allocation of our enormous pension wealth, relative to what happens in the United States, Canada, Australia or other markets.

“At the same time, we’re struggling to find private capital to invest in infrastructure, and private capital to invest in our growth and scale up companies.”

And he added: “We have to ask ourselves is that really a sensible long-term solution for our society.”