Context
The FCA has responded to the Chancellor, Rachel Reeves, following her letter to the FCA, thanking her for providing clear recommendations in relation to the aspects of the Government’s economic policy which the FCA should consider when delivering on its objectives. Reeves’ letter stated that growth is the defining mission of the current Government and that it is vital that the FCA continues to fully embed the secondary international competitiveness and growth objective throughout the organisation.
Key points to note and next actions
In response to the Chancellor’s recommendations that the FCA supports innovative new firms, ensuring access for customers to appropriate advice and products, help firms to support net zero transition and ensuring that firms have a positive experience of engaging with the FCA, Nikhil Rathi has made the following points:
- In the coming months the FCA will, amongst other things, set out its next steps on streamlining the Handbook, following the Call for Input (which generated over 170 responses with mixed views from industry)
- The four main pillars of the FCA’s Strategy for 2025-2030 will align with the Chancellor’s recommendations (growth, tackling financial crime, enabling people to make the most of their money and strengthening the FCA’s operational effectiveness and efficiency
- In relation to international leadership, the FCA acknowledges the need to maintain its leading role with global partners and in international forums
- The FCA welcomes the Government’s support as it seeks to facilitate more informed and responsible risk-taking by authorised firms and consumers.
In relation to the ‘risk-taking’ element of the Government’s recommendations, the FCA is clearly conflicted in considering an appropriate risk appetite. It will need to manage what it describes as “the diversity of views” between minimising consumer losses and risk-taking, and those who want us to focus on reducing burdens on firms (thereby supporting the growth and international competitiveness of the financial services industry by making the UK an easier place to be a regulated firm).