A focus on how the FCA can support early and high growth firms will form the cornerstone of the FCA’s strategy between 2025 and 2030, according to CEO Nikhil Rathi.

In a letter to Chancellor Rachel Reeves, Mr Rathi said the FCA wants to ensure that innovative new firms are supported to enter the financial services market.

He said: “We are keen to ensure our work dovetails with the Government’s financial services growth and competitiveness strategy. We will also draw on the research we are funding to identify how regulation can support growth in every part of the UK.”

The regulator’s strategy will also have an additional two pillars: tackling financial crime and improving consumer resilience.

In a previous letter to Mr Rathi, Chancellor Reeves focused on the negative impact that financial crime has on economic growth. Mr Rathi said the FCA will continue to prioritise tacking financial crime, building on its recent progress to slow the growth in investment fraud.

Mr Rathi added that the FCA plans to do more to support vulnerable customers.

He said: “Enabling people to make the most of their money through a focus on consumer resilience will be a third priority. We want to maximise the potential of open banking and open finance, and do more to support vulnerable consumers. Products and advice must empower consumers to make informed choices and pursue sensible risk-taking.”

The FCA also plans to use data and technology to streamline its administrative processes to improve effectiveness and efficiency.

In his response to Chancellor Reeves, Mr Rathi also highlighted that the FCA will soon set out the next steps for streamlining its rulebook.

The letter also addressed the FCA’s plans to consult on proposals for targeted support in pensions, as outlined in its recent Consumer Duty focus areas report.

Yesterday the regulator revealed that its Consumer Duty priorities for the coming months will include looking at targeted support for pension savers. It is consulting on proposals for targeted support which would allow regulated firms to provide support to pension savers in a new way.

The details were published in its Consumer Duty focus areas for the remainder of FY24/25.

In his letter, Mr Rathi welcomed the Government’s commitment to support the FCA as it seeks to, “facilitate more informed and responsible risk-taking” by firms and consumers.

Mr Rathi also asked for more detail on the Government’s perspective on consumer compensation.

He said: “Understanding your perspective on issues of compensation and where liability should fall in the context of the scale of the UK financial services sector and the imperative of prioritisation will be important in influencing the risk appetite we are able to sustain in the coming years. Improving how we work with stakeholders to manage any future mass redress events will also help us make sure that we can support both more informed risk taking and consequently greater trust and confidence in the UK’s financial markets.”

He said that the FCA will, “never operate a zero failure regulatory regime” and that the Government and the regulator need to agree how to hold the FCA to account, “in a proportionate way” if it is to avoid risk aversion.