FCA chief executive signals major pullback from rule-writing behaviour

FCA chief executive Nikhil Rathi has signalled the regulator’s intention to move away from the writing of new rules, to instead focus on “using the Consumer Duty and supervisory tools to address market failures”.

The announcement of the change in tack came during Rathi’s appearance on the inaugural episode of the Fairer Finance podcast, launched yesterday (18 February 2026).

Explaining the policy change, Rathi said: “Not every problem is going to be solved quickly by doing big interventions, more rules, bans, guidance. I think that there’s a whole range of influences that are informing our willingness to write lots of new rules.

“We’re moving to an outcomes-based approach, and that will mean less rules in the future because we think the Consumer Duty will do a lot of the work for us.”

Consumer Duty, introduced in July 2023, is a regulatory framework laid out by the FCA which compels businesses to “act to deliver good outcomes for retail customers”.

Government responsibility

Rathi also indicated that the FCA would step back from certain distributional areas, suggesting that they were “not within our mandate to decide on”, instead moving responsibility to the government.

Discussing the idea that financially vulnerable customers may subsidise wealthier customers – such as in the case of those paying monthly instead of yearly insurance premiums – he explained: “What is not within our mandate to decide on is some of the distributional questions.

“There can be some areas of our work which intersect with social policy. And the issue that certain products may be more expensive for certain parts of society is not going to be directly something a regulator deals with. It becomes something that becomes a matter for government.”

Other topics – such as changes to the motor finance redress scheme consultation outcomes following industry lobbying, the acceptance of risk related to loosening of mortgage lending rules and the application of the protection market study – were also discussed.