In a recent speech delivered at the Association of British Insurers roundtable, Nikhil Rathi, the chief executive of the FCA, emphasised the need for bold regulatory actions to support growth, foster innovation, and maintain consumer protections. This article considers the key highlights of his speech, which emphasised the FCA's commitment to driving effectiveness while ensuring stability and trust within the industry.
Accelerating growth initiatives
Rathi began by acknowledging the urgency of addressing the "Gordian knot" of growth challenges facing the FCA. He assured the audience that the FCA is working at pace to support growth initiatives. These relate to matters including mortgage affordability, digital payments, removing redundant data returns, supporting international promotion of UK financial services, opening up to more innovative firms and cutting barriers between regulators.
Flexibility on whether to appoint Consumer Duty board champions
One of the significant announcements was the decision to allow firms the flexibility to choose whether to have a Consumer Duty board champion. Looking to reduce burdens where it can, the FCA will also be considering ideas raised in the Consumer Duty CfI such as the frequency of assessing fair value and removing prescription around continuous professional development. In the insurance sector the FCA is looking at simplifying reporting requirements including disclosures, training and competency rules, review cycles, product-specific rules, and the scope of international rules.
Addressing redress events
Rathi also addressed the issue of major redress events, which have historically shaken confidence in the industry. While the FCA cannot rule out the possibility of other major redress events if there are systemic breaches of the law, Rathi reassured the audience that the FCA is not currently anticipating any further such mass redress events. He highlighted the importance of building trust and ensuring stability, noting that the FCA's focus is now on reviewing the framework for complaints and redress mechanisms in collaboration with the Financial Ombudsman Service (FOS). This review aims to ensure tighter alignment and clearer early warnings when significant issues are emerging, thereby boosting the predictability that firms need to make informed decisions.
Risk of consumer harm
As the FCA works with the government on its financial and professional services strategy, it seeks bold thinking regarding the government's risk appetite, particularly in relation to consumer harm. The FCA would value metrics against which it can be held to account.
Balancing regulatory change
Rathi acknowledged the concerns raised by industry stakeholders regarding the pace of regulatory change. He reassured the audience that the FCA is aiming for fewer large-scale changes in its next 5-year strategy. The FCA is committed to streamlining its work, reducing duplication, and being creative and flexible in its approach. Rathi emphasised the importance of pragmatic conversations and collaboration with the industry to achieve a balance between necessary regulatory changes and the need for stability and predictability.
