Speech focuses on the regulatory change agenda, and confirms that firms are no longer expected to have a Consumer Duty board champion.

By Rob Moulton, Nicola Higgs, Becky Critchley, and Charlotte Collins

On 27 February 2025, the FCA published a speech given by Nikhil Rathi, in which he talks about the FCA’s efforts to support the government’s growth agenda. This follows a difficult few months for the regulator, in which it has come under increasing pressure from the government and individual Parliamentary groups and committees, from various angles.

Champion of Growth

Mr Rathi is keen to emphasise that the FCA is willing to take “bold action” to help deliver the growth agenda. He explains that the FCA plans to move quickly in the near-term to progress proposals set out in a letter sent to the Prime Minister in January 2025. These include initiatives to accelerate digital innovation, reduce the regulatory burden, and smooth regulatory processes such as authorisation. For example, the FCA is planning to start work on reducing reporting requirements and will consult in March on removing redundant data returns.

More generally, the FCA is “aiming for fewer large-scale changes in our next 5-year strategy”, although Mr Rathi acknowledges that different views are in play about the pace of regulatory change. The FCA seems unlikely to scrap any important current initiatives, and notably, many of the regulator’s significant projects derive from the exercise to restate assimilated law in the Handbook. A number of key files are still outstanding as part of this work and we would expect this to remain a priority. However, efforts to reduce the burden of regulatory change could mean that we are to expect fewer home-grown sizeable initiatives of a similar nature to the Consumer Duty or the SMCR in the next few years.

Mr Rathi also uses the speech to emphasise, yet again, that the FCA wants the government to clearly articulate its risk appetite and set firm metrics against which the FCA can be held to account. The regulator is battling with competing views and priorities, and understandably does not want to be hung out to dry when greater risk-taking inevitably leads to an increase in firm failures and consumer harm.

Interestingly, Mr Rathi also provides a brief update on the motor finance cases due to be heard by the Supreme Court at the beginning of April. The FCA now hopes to “provide clarity on any redress mechanism by the end of this year” — significantly later than its previously published expectations. Also notable is that, for the time being, the FCA is not currently anticipating any further such mass redress events.

Consumer Duty Champion

One of the key takeaways from the speech is the confirmation that the FCA has removed the expectation that firms will appoint a Consumer Duty champion, with effect from 27 February 2025. This change was first previewed in the letter referenced above, although that letter did not indicate the planned timing for the change.

The expectation that firms will have a board-level champion is set out in guidance, not rules, so while it has never been a hard requirement, firms have treated it as such in their endeavours to show their commitment to implementing the Duty effectively. FG22/5 provides that the champion is expected to be someone “who, along with the Chair and the CEO, ensures that the Duty is being discussed regularly and raised in all relevant discussions”. Notably, the relevant parts of FG22/5 have not yet been updated, but the FCA intends to amend the guidance “in due course”.

On its Consumer Duty webpage, the FCA now states:

“The Duty came into force for open products and services on 31 July 2023, and for closed products and services on 31 July 2024. It should therefore be well-embedded in firms’ management discussions, processes, and policies.

On this basis, we want to provide firms with greater flexibility on their ongoing governance arrangements and from 27 February 2025 we no longer expect them to have a Duty champion, although they can retain the role should they wish to do so.”

This is an interesting development because all of the FCA’s rhetoric around the Consumer Duty to date has emphasised that it is not a “once and done” exercise, but that embedding the Duty requires an ongoing cultural shift. However, the regulator now seems to be saying that, because the key implementation dates have passed, firms no longer need to be overseeing implementation so closely. Firms should think carefully about whether to remove the champion or whether in fact they find this a useful mechanism for promoting the firm’s compliance efforts, as expectations relating to Consumer Duty compliance have not changed.