UK FCA to Introduce Fewer Rules Going Forward

Speaking on the Fairer Finance podcast earlier this month, Nikhil Rathi, CEO of the UK Financial Conduct Authority (FCA), made clear that the regulator intends to introduce fewer rules going forward, as reported by FT Adviser.

“[N]ot every problem is going to be solved quickly by doing big interventions, more rules, bans, guidance,” Rathi emphasized. Instead, he identified three factors shaping the regulator’s approach: the Consumer Duty’s outcomes-based framework, pressure to modernize regulation and support growth, and the pace of technological change, particularly in AI.

“[W]e said all the way from the beginning, we are moving to an outcomes based approach, that will mean less rules in the future because we think the consumer duty will do a lot of the work for us,” Rathi said. He pointed to an active enforcement picture alongside that shift, with 40 outcomes in 2024, up from 30 in 2023, six Consumer Duty cases now underway, and a record number of criminal prosecutions.

Rathi also addressed the FCA's use of Voluntary Requirements (VREQs), which enable the regulator to secure changes from firms without public announcement. He acknowledged that the Treasury had been persuaded by industry lobbying to limit transparency around such actions, but said the FCA is strengthening its communications through its enforcement watch.

James Daley, Managing Director of consumer group Fairer Finance, welcomed Rathi’s candor but was pointed in his assessment: “We are of course disappointed to see confirmation that the FCA is stepping back from tackling problems with new regulation.” Daley argued that while the Consumer Duty allows the FCA to improve conduct firm by firm, it cannot address broader structural market failures that would require “new rules or much clearer guidance.”