Committee publication · Correspondence · 28 January 2025
Letter from Nikhil Rathi, Chief Executive Officer, Financial Conduct Authority, relating to oral evidence given before the Committee in December 2024, dated 20 January 2025
From: Treasury Committee
Summary
Nikhil Rathi, FCA Chief Executive, responds to Treasury Committee follow-up questions from December 2024 oral evidence. He addresses pension scheme funding characterisation, Board risk priorities, enforcement strategy reform, the 'naming and shaming' consultation backlash, and domestic financial abuse work. The FCA defends its pension position under regulatory metrics while acknowledging accounting standards show different results, explains enforcement portfolio streamlining to boost pace and deterrent impact, and clarifies constraints on joint mortgage separation without legislative change.
Key findings
- FCA pension plan funding improved by £28m year-on-year under Technical Provision basis (regulatory measure), but IAS19 accounting showed £8.6m worsening; FCA considers scheme 'well-funded' under regulatory framework despite different accounting treatment.
- FCA Board's current 'red risk concerns' centre on wholesale markets/market abuse, financial crime, smarter regulatory framework, and consumer needs; pension deficit is not prioritised as a Board-level red risk.
- Enforcement portfolio deliberately reduced by a third (220 to 147 cases) to increase pace and focus; average investigation duration was 41 months; FCA increased public outcomes from 27 (2023) to 41 (2024) despite smaller caseload.
- FCA acknowledges 'naming and shaming' consultation was inadequately communicated and should have signalled thinking earlier; now commits to clearer messaging on future consultations and will include parliamentary recommendations in consultation documents.
- On mortgage coercion, FCA confirms recommendation for unilateral borrower changes to joint mortgages would require legislative change due to joint-and-several liability constraints; FCA role is limited to forbearance flexibility under existing rules.
Tone
FactualTopics
Key actors
Nikhil Rathi, Financial Conduct Authority (FCA), Dame Meg Hillier MP, The Pensions Regulator (TPR), Surviving Economic Abuse (SEA), UK Finance, Prudential Regulation Authority (PRA)
Notable line
“We have deliberately streamlined our enforcement portfolio, reducing it by a third (from 220 to 147) 1 so we can focus more resource on increasing the pace of our priority operations.”
Key Quotes
“On this measure, the pension plan's funding position improved by c.£28m over the year to 31 March 2024 and on this basis, we consider the pension plan is "well - funded".”
“We have deliberately streamlined our enforcement portfolio, reducing it by a third (from 220 to 147) 1 so we can focus more resource on increasing the pace of our priority operations.”
“We accept that we could have been clearer in communications around our transparency proposals and the wider changes we have instigated to our enforcement approach.”
“The recommendation from SEA for only one borrower in a joint and several contract to make changes without the consent of the other borrower(s) may therefore require legislative 3 https://www.fca.org.uk/publication/finalised-guidance/fg21-1.pdf …”
“This does mean that we will not pursue all cases and all intelligence that we receive – for example we receive on average 25,000 allegations of unauthorised business a year and pursuing all cases would not be feasible.”
Source · parliament.uk record ↗