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Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), addressed TheCityUK’s annual conference on 26 June 2025, outlining the regulator’s vision for the future of the UK financial market. The speech came as the FCA concluded its own period of reflection, working with industry stakeholders on a new five-year strategy.
Rathi began by referencing the Government’s Industrial Strategy, which aims for the UK to become the world’s most innovative full-service financial centre by 2035. He highlighted the sector’s significant contribution to the economy, noting, “Financial services contribute £214bn gross value added (GVA) to our economy. We have world-leading banking, insurance, derivatives, debt, foreign exchange and commodity markets and infrastructure. We lead Europe in fintechs and are second only to the US in investment management.”
The chief executive was candid about the challenges facing the sector, including amplified market shocks due to interconnectedness, difficulties in sustaining international standards, and intensifying global competition. He cautioned against complacency and the dangers of self-criticism becoming a self-fulfilling prophecy, urging a reset in the industry’s psychology.
Rathi pointed to positive indicators, such as London closing the gap on New York in the Global Financial Centres Index, and a more than 50% rise in financial services exports since 2019. He stated, “If we keep telling ourselves – and the world – that London has become second-rate, that risks becoming a self-fulfilling prophecy. This is the moment to reset the psychology. Put aside British modesty and celebrate our raw strengths.”
Discussing the conditions necessary for growth, Rathi cited examples like Applied Nutrition’s successful listing and the impact of recent listing reforms. He emphasised the FCA’s shift towards outcomes-based regulation, saying, “A focus on purpose, not process. More flexibility to keep pace with rapid innovation. And a stronger culture of accountability underpinned by the Senior Managers and Certification Regime, which enables us to avoid new regulation.”
Rathi detailed the FCA’s recent actions in response to government calls for growth, including scrapping redundant data returns, unlocking flexibility in the mortgage market, and launching PISCES, a new venue for trading private shares. He announced further initiatives in the pipeline, such as reducing frictions in securitisations, prospectus reform, and targeted support for simplified investment advice.
On the evolving relationship between regulator and regulated, Rathi said, “Part of a broader shift – towards a more open, collaborative relationship between regulator and regulated. Built on trust, shared problem-solving and proportionality. So we can win the race for adoption of innovation.”
Addressing risk culture, Rathi acknowledged criticism of the FCA as being too risk averse but noted significant changes, including the introduction of the Consumer Duty and a reduction in the industry compensation levy. He said, “Today, the risk aversion critique comes from a different perspective: that excessive regulatory compliance and perceived lack of commercial nous stifle growth and innovation.”
Rathi called for an open debate on risk appetite and metrics for tolerable failures, stating, “One that gives firms and consumers long-term confidence to invest, while building greater coherence between government, industry, Parliament and regulators.”
He also raised questions about the continued relevance of the Mortgage Charter and the need for differentiated regulation between wholesale and retail markets, while warning that any shift must be accompanied by widespread acceptance of reduced protections for some participants.
On data, Rathi highlighted the FCA’s efforts to reduce unnecessary data collection but stressed the need for timely data in areas such as hedge fund activity in gilt markets. “We will always be open to growth and competition – new players, new models. But that openness has to be based on a clear view of the risks, so that we safeguard market integrity and confidence – crucial foundations for growth,” he said.
He also noted the importance of international data sharing and the FCA’s work on global financial stability frameworks.
Rathi was clear that market integrity remains the foundation of long-term competitiveness. He referenced the FCA’s sanctions against Credit Suisse over the Mozambique loan scandal, saying, “Could we look ourselves in the mirror in 5 years’ time, if these were the costs of competitiveness?”
On crypto, he stated, “It’s because crypto remains the second-highest money-laundering threat on the UK’s national risk register. A very real – and growing – terrorist financing risk. So our regulatory framework needs to support innovation, with guardrails.”
Looking ahead, Rathi highlighted the UK’s leadership in fund management and the potential to lead on tokenisation, referencing collaboration with the Investment Association and the Monetary Authority of Singapore through Project Guardian.
He concluded by encouraging industry engagement with the FCA, stating, “Because how we answer that question together and execute at pace, will define the UK’s future in global finance.”
