On 28 January 2025, the House of Commons Treasury Committee published a letter from the Chief Executive of the Financial Conduct Authority (FCA), Nikhil Rathi, responding to questions from the Treasury Committee on topics including risk, the FCA’s proposed enforcement reforms, and mortgage coercion.
Risk
In response to a question regarding the FCA Board’s ‘red risk concerns’, Mr Rathi notes that the key areas of concern continue to be strengthening wholesale markets, market abuse, financial crime, the Smarter Regulatory Framework and putting consumer needs first.
Enforcement reforms
On enforcement, Mr Rathi first provides an overview of various changes the FCA has made in its approach to enforcement. These include streamlining its enforcement portfolio in order to focus on increasing the pace of priority operations, raising the bar for opening an enforcement investigation, and investing in data and technology to improve analytics and alerting capability.
In relation to the recent 2-part consultation on publicising enforcement investigations, Mr Rathi acknowledges that the FCA could have been clearer in communications around its proposals. He welcomes the responses and engagement to the consultation and says the FCA has taken on board the wide range of constructive feedback to help re-shape its proposals.
Mr Rathi also explains that, when measuring disruptions to the financial system or market for the purposes of the public interest test under the revised proposals, the FCA would consider the firm size, complexity and impact on markets and consumers, and would also invite representations from the subject of the investigation.
Mortgage coercion
In response to the Treasury Committee’s final questions, Mr Rathi outlines the steps the FCA has taken to combat domestic financial abuse, including in particular the use of joint mortgages for coercion following a September 2024 report by charity Surviving Economic Abuse on the topic.