| Link(s): | Response to the Treasury’s remit letter 2026 CX_Letter_Recommendations_for_the_Financial_Conduct_Authority__FCA__-_Nikhil_Rathi_14112024.pdf |
Context
The FCA has published its latest annual response letter to the Treasury’s November 2024 ‘remit letter’. The letter is accompanied by an Annex, mapping Government recommendations to FCA strategy and delivery. The examples set out in the Annex are illustrative and intended to demonstrate strategic alignment, where relevant, with the Government’s recommendations, its Financial Services Growth and Competitiveness Strategy and the Leeds Reforms, and delivery – rather than provide an exhaustive account of FCA activity.
Key points to note and next actions
The letter sets out that:
- Supporting sustainable growth and innovation requires clear and proportionate judgments about risk.
- The FCA’s approach is grounded in a focus on outcomes and material harm; intervening decisively where risks threaten consumer protection, market integrity or confidence, while allowing space for responsible risk-taking and innovation that can support investment, productivity and longer-term economic growth.
- This approach enables the FCA to target regulatory effort where it has greatest impact.
- Trade-offs inherent in pursuing growth will become more explicit, with a corresponding acceptance that not all harm can be prevented.
- These are not decisions for the regulator alone, but for the whole system. They often involve broader, fundamental policy choices, and not simply regulatory ones.
- The Government should be clear about how it wishes growth to be balanced against the overall risk appetite and associated risk metrics for the regulatory system, providing a stable and enduring framework that allows us to adapt to a challenging external environment.
The Annex provides updates in relation to six specific Government recommendations, and on reducing the regulatory burden on firms and improving efficiency, enabling informed and responsible risk-taking, and tackling financial crime.