Jonathan Cavill and Anthony Harrison, financial services experts at Pinsent Masons, were commenting after a recent speech by the FCA’s chief economist, Kate Collyer, in which she outlined the regulator’s changing approach to risk and commitment to “smarter regulation” that balances opportunity with vigilance and tailoring rules to remove unnecessary barriers and unlock growth.
In her comments, Collyer said the FCA is advocating for proportionate risk-taking to increase investment while supporting consumer well-being and market dynamism. She said the FCA was rebalancing regulation to boost productivity, competition and consumer outcomes, as well as creating investment opportunities, easing mortgage rules and reforming capital markets to support further innovation and growth.
Commenting on the remarks, Cavill said: “The FCA is signalling a shift from risk aversion to risk calibration – a subtle but powerful change in regulatory tone. This is not deregulation; it’s strategic rebalancing. The message is clear: growth and risk can coexist.”
The speech echoed some of the sentiments outlined by FCA chief executive Nikhil Rathi earlier this year, where he set out the regulator’s resolve to implement “outcomes-based” regulation to better support growth, innovation and accountability across the financial services sector.
Collyer emphasised that there were always ‘trade-offs’ when making regulatory decisions, but acknowledged that excessive caution can hinder progress. She pointed to the series of reforms the FCA is already undertaking to revolutionise the mortgage market, aimed at boosting mortgage affordability by widening access and boosting competition. She said capital market reform – including significant overhaul of the listings regime – would empower investors to make their own risk decisions.
Other initiatives, like the Private Intermittent Securities and Capital Exchange System (PISCES) – a new type of private stock market that the FCA says will give investors more opportunities to buy stakes in growing companies – seek to expand private market access, and are in keeping with the regulator’s growing efforts to promote a tech-positive stance that encourages innovation in artificial intelligence (AI) and ‘open finance’, where consumers and small businesses can give access to their payment account data to third-party providers under strict conditions.
Collyer also cautioned that the regulator’s approach was evidence-based and that ongoing evaluation and monitoring would underpin its shifting approach, with metrics being developed on a continuous basis to assess regulatory impact and systemic risk.
Harrison welcomed this approach. “Policy without evidence is guesswork,” he said. “The FCA’s persistent focus on metrics and monitoring is indicative of an ever-maturing regulatory model. Rebalancing risk isn’t a leap of faith – it’s a data-driven balance of trade-offs and outcomes.”