Work of the Financial Conduct Authority

Status / emerging findings

• FCA announced motor finance redress scheme on 30 March 2026 with compensation likely to affect up to 14.6 million agreements from 2007–2020; average payouts estimated in hundreds rather than thousands of pounds, significantly lower than some claimants' expectations.
• FCA enforcement capability has strengthened: 21 prosecutions initiated in 2024–25 (record), 10 insider trading convictions in past year, and financial promotions enforcement surged from 570 to 16,000 annually through technology, countering claims of regulatory weakness.
• FCA leadership explicitly acknowledged explicit trade-offs between growth and consumer harm—relaxing mortgage standards will increase defaults, enabling fintech may increase fraud—framing these as acceptable costs for economic benefit.
• Unresolved tensions emerged over Financial Ombudsman Service governance: FCA opposes proposed government appointment of ombudsman chair, citing risks to independence and accountability; committee probing this structural reform.
• Industry witnesses cited a 'ratchet effect' in regulation (rules added but rarely removed) and Financial Ombudsman Service mission-creep as drivers of regulatory risk-aversion that harms consumers through financial exclusion and lower returns.

Why it matters

The FCA regulates £7+ trillion of UK financial assets and 60,000+ firms; this inquiry determines whether the regulator can sustain consumer trust while meeting government growth targets, and whether major redress schemes (motor finance alone affects 14.6 million consumers) are adequately compensating harm.

Tone arc

Opened procedural in December 2024 (discussing FCA strategy and growth objective), shifted adversarial after Budget leak session in December 2025 (questioning market abuse investigations), then returned mixed in March 2026 as motor finance scheme neared resolution and enforcement record defended. Industry testimony in early December 2024 introduced growth-vs-protection framing that dominated subsequent FCA sessions.

Key witnesses

Nikhil Rathi (FCA Chief Executive), Ashley Alder (FCA Chair), Sarah Pritchard (FCA), Stephen Braviner Roman (FCA), Miles Celic (TheCityUK), Mick McAteer (consumer representative), Rocio Concha (consumer advocate), Hannah Gurga (industry)