Nikhil Rathi has been given another five-year term as head of the Financial Conduct Authority, a recognition of his embrace of the UK government’s push to boost economic growth by easing the burden of regulation.
Rathi, former chief executive of the London Stock Exchange, is the first head of the British financial watchdog to be given a second five-year term.
The Treasury’s decision, announced on Thursday, was broadly welcomed in the City, where executives said it helped to have stability at the FCA. But some said Rathi needed to go further in removing unnecessary rules and improving the efficiency and quality of the regulator’s 5,000 officials.
Since his appointment in 2020, Rathi has overseen major changes at the FCA, including overhauling its remuneration policy and refocusing its enforcement approach. Last month he unveiled a new five-year strategy designed to support the economy.
The FCA, which oversees more than 40,000 financial services groups, protects consumers and stimulates competition, has come under pressure from Prime Minister Sir Keir Starmer’s government to ease the burden of red tape and encourage more risk-taking.
Rathi said he was “honoured” to be reappointed and “proud of the reforms we have delivered to support growth, bolster operational effectiveness, set higher standards and to keep our markets clean and open”.
“While we must go further and faster in this age of volatility, the UK is well placed as a major international financial centre,” he added.
Officials said Rathi’s reappointment reflected a view in government that the FCA had embraced Starmer’s new approach. They noted Rathi’s commitments to ease limits on mortgage lending, increase support to firms applying for licences and raise the £100 limit on contactless payments.
Last year the FCA also overhauled the rules for London-listed companies to increase their flexibility in areas such as dual-class share structures to try to attract more initial public offerings in the UK.
David Postings, head of the main banking trade body UK Finance, said Rathi had “delivered a significant amount of reform in his time and engaged constructively with the financial services sector”.
Miles Celic, head of TheCityUK lobby group, said he looked forward to continuing to work with Rathi as the FCA “delivers more proportionate and efficient regulation”.
The regulator recently backed down on plans to “name and shame” more of the companies it investigates, a proposal heavily lobbied against by City firms
UK chancellor Rachel Reeves said in a letter to Rathi on Thursday that she expected him to “continue the work you have been leading to deliver a shift in mindset so that growth and competitiveness are at the core of your policymaking and approach to supervision and interacting with firms”.
The FCA has, however, been criticised by the City for the way it handled complaints about the mis-selling of car finance, which is expected to cost lenders billions of pounds in redress.
City lawyers said the regulator could still be difficult to deal with. “It is not just the FCA rule book that needs to be cut back, but also its style of supervision,” said Nathan Willmott, partner at law firm Ashurst, adding that the regulator had struggled to “attract and retain enough high-calibre people”.
When Rathi was appointed to the FCA by the previous Conservative government, the regulator was reeling from heavy criticism over its handling of the collapsed minibond provider London Capital & Finance and the failed Connaught Income Fund.
The transformation programme he oversaw in response — including scrapping bonuses for FCA employees, increasing training and investing in technology — triggered many staff departures and an unprecedented strike.
But morale at the watchdog has improved recently and employee turnover fell to 9.9 per cent last year, down from 17.5 per cent previously.
Since the FCA was created in 2013 out of the disbanded Financial Services Authority, none of its chief executives have completed their five-year terms.
Martin Wheatley was fired after less than three years in the job by former Conservative chancellor George Osborne in 2015, and Andrew Bailey left a year before his term was due to end to become Bank of England governor in 2020.
