What kind of market do we want to be?

It’s that time of year. Students finishing school or university, wondering what direction next.

We are just through our own period of reflection at the FCA – working intensely with many of you on our new 5-year strategy[1].

And from personal experience: deciding to stay on into a second term as chief executive involved a few hours of thoughtful mirror-staring.

Whoever you are, some days reflection is energising. Some days it’s unflattering. But it’s always revealing.

So as we intensify our work to drive competitiveness and growth, we need to take a long hard look in the mirror, as a regulator and as an industry. Warts and all.

Contemplating what we see today, but, crucially, what we want to see looking back a few years on.

What kind of market do we want to be?

The market in the mirror: where the UK stands today

The Government’s Industrial Strategy[2] aims for the UK to be the world’s most innovative full-service financial centre by 2035.

There is no reason we cannot achieve this together.  

Financial services contribute £214bn gross value added (GVA) to our economy.

We have world-leading banking, insurance, derivatives, debt, foreign exchange and commodity markets and infrastructure.

We lead Europe in fintechs and are second only to the US in investment management.

This is a market with real reach, depth, purpose. Exceptional talent.

Let’s not rose tint the mirror; there are challenges.

The interconnectedness in markets is amplifying shocks.

International standards, the bedrock of UK wholesale markets, are becoming harder to sustain.

We will have to make choices and won’t always be aligned with key partners.  

And of course, international competition is accelerating: with multiple credible alternatives across time zones.

We cannot be complacent. We need, collectively, to move much faster and to execute better to stay ahead.

The good news is that things are not as bleak as some headlines.

The Global Financial Centres Index[3] shows London closing the gap on New York, with Edinburgh and Glasgow making notable gains.

Financial services exports are up more than 50%[4] (in nominal terms) since 2019.

And investor demand for UK assets is growing. Many UK financial company share prices are at multiyear highs, and the Treasury’s exit from its NatWest holding has attracted buyers across the UK, US and Asia.

So although we shouldn’t fall into a Narcissus-like trap of self-admiration, we shouldn’t relentlessly talk the UK down either.

If we keep telling ourselves – and the world – that London has become second-rate, that risks becoming a self-fulfilling prophecy.

This is the moment to reset the psychology. Put aside British modesty and celebrate our raw strengths.

Then make sure we go further, building consensus about what this entails – including our approach to risk.
 

Creating the conditions for growth

Wholesale markets with high integrity will undoubtedly remain key to success.

Take Applied Nutrition – a homegrown business.

It listed in October[5], reaching a market cap of over a third of a billion pounds.

Or the 23 significant transactions by listed companies, using a streamlined process following our listing reforms last year.

Prime examples of the market providing capital and liquidity for growth. A springboard to expand exports and jobs.

If we want more stories like this, we need to champion the conditions that make them possible.

That is why the FCA has shifted towards outcomes-based regulation.

A focus on purpose, not process. More flexibility to keep pace with rapid innovation. And a stronger culture of accountability underpinned by the Senior Managers and Certification Regime, which enables us to avoid new regulation.

All long-term competitive advantages.

That’s strategy. What about tactics?

Tuesday marked 6 months since the Prime Minister’s Christmas gift: a challenge to do more to support growth. One we have enthusiastically embraced.

We responded with nearly 50 proposals[6], and I know some of you have been surprised just how quickly we’ve acted.

• Scrapping redundant data returns[7] and supervisory communications[8].
• Unlocking flexibility in the mortgage market[9].
• Launching PISCES[10], a new venue for trading private shares.

More is coming.

A consultation on reducing frictions in securitisations… 

Prospectus reform, making it easier to raise capital... 

And an imminent announcement on targeted support and simplified advice – helping more people out of cash and into investing in markets for better long-term returns.

A new relationship between regulator and regulated

We’re also changing how we work with you.

I hope you’ve noticed our increased engagement with analysts and investors.

At a recent AI roundtable, we heard very little by way of requests to streamline regulation.

Instead, firms are asking to work more closely with us to build confidence, understand customer response, and scale safely.

Our AI Lab[11] will provide a safe space for firms to test market-facing applications.

Part of a broader shift – towards a more open, collaborative relationship between regulator and regulated.

Built on trust, shared problem-solving and proportionality. So we can win the race for adoption of innovation.
 

Risk culture

Let me talk about 2 areas where this is particularly important – risk culture and data.

The FCA has repeatedly faced criticism for being too risk averse.

When I became chief executive 5 years ago, a central theme was that we were too legally risk averse. Not curious, assertive or joined up enough.  

We have since made big changes: the Consumer Duty[12], stepping up the fight against financial crime, and taking several groundbreaking legal actions.

In the process, we’ve brought the industry compensation levy down to a ten-year low, supporting competitiveness.

Today, the risk aversion critique comes from a different perspective: that excessive regulatory compliance and perceived lack of commercial nous stifle growth and innovation.  

The Chancellor sees the regulatory system as having regulated for risk, not growth.

We are engaging seriously with this feedback and will continue to make changes at pace.  

And one of the reasons I have consistently called for an open debate on risk appetite – and metrics for tolerable failures, alongside ones for competitiveness and growth, and operational performance – is to ensure we shift to a stance that endures.

One that gives firms and consumers long-term confidence to invest, while building greater coherence between government, industry, Parliament and regulators.  

Take mortgages.  

I have raised whether the Mortgage Charter – designed for a period of sharply rising interest rates – could be retired.

With the Duty in place, repossessions low, and a maturing risk mindset, do we need this duplicative approach with the added reporting burdens it brings?  

As we review the mortgage market, what signal does it send about political risk tolerance if it is retained?

We also hear arguments about further differentiating regulation for wholesale and retail markets.

Although many also argue low retail participation is a 'missing ingredient' for success in our capital markets.  

We’re open to clearer client classifications applicable to investment firms – though some fixes would require legislation.  

But if we do shift the boundary, it needs to stick.

This means widespread acceptance that some may have fewer protections than today.

We are changing insurance rules to be clearer where the Consumer Duty applies, making it easier to serve overseas clients.

Data

Another area where trust matters most is on data.

We are taking a more proportionate approach to data we ask for. 

Three regular data collections already switched off[7], benefitting an estimated 16,000 firms, and a consultation this summer on retiring more.

But in some areas, the opposite is true. We need more data, and faster.

I spoke in October about ‘predictable volatility[13]’, now a fixture of global markets.

We saw it in the LDI crisis. We saw it in April. And it’s a matter of ‘when’ not ‘if’ the next shock comes.

When it does, we need to be ready.

Hedge funds are now important liquidity providers in fixed income markets – behind an estimated 27% of weekly dealer to client UK gilt trades.

Visibility here matters.  

We will always be open to growth and competition – new players, new models.

But that openness has to be based on a clear view of the risks, so that we safeguard market integrity and confidence – crucial foundations for growth.

We must build data sharing beyond our borders too, with offshore over-the-counter (OTC) activity impacting our core markets.

Data is a dominating theme not only in Financial Policy Committee discussions in the UK.  

Sarah Pritchard, now our Deputy Chief Executive, led Financial Stability Board work on leverage in non-bank financial institutions building an even stronger international framework.  

Some argue that we should follow the example of others: less regulatory data, fewer constraints.

We will always benchmark against partners. At the same time, we run different risks – particularly in sovereign debt markets – if we leave some data on the table. We are smaller and arguably more exposed.

So we need a different kind of confidence. Built on strong evidence and timely data.

That’s not regulation overreach – it’s about what’s appropriate for our context, and our market.

Integrity: the foundation of long-term competitiveness

So what kind of market do we want to be?

It’s not just a question of systems. It’s also about standards.

Being candid: there is money to be made by looking the other way, and by turning a blind eye to dirty cash. We have seen that movie before.

But is that really the ‘at-any-cost’ kind of competitiveness we’re seeking?

When we sanctioned Credit Suisse[14] over the Mozambique loan scandal, that was a real act of accountability.

$1.3bn of loans tainted by corruption. Millions of people pushed into deeper poverty in one of the world’s poorest nations.

Could we look ourselves in the mirror in 5 years’ time, if these were the costs of competitiveness?

The FCA responded decisively by banning three Credit Suisse employees for their lack of integrity, and reached a global settlement with the firm worth around US$475m.

And when we treat crypto with caution, it’s not because we are technophobic.

It’s because crypto remains the second-highest money-laundering threat on the UK’s national risk register. A very real – and growing – terrorist financing risk.

So our regulatory framework needs to support innovation, with guardrails.

We are being bold to support change, innovation, growth.

But let’s not confuse risk appetite with compromising integrity.

Looking ahead

So where does the UK go next?

I mentioned earlier that we are the largest fund management centre in Europe. Could we lead on tokenisation?

The average age of an investor in an authorised fund is 55. But younger investors want a digital first experience: apps, instant trading, 24/7.  

There is huge potential for the UK in this area, but it will require investment from firms.

We have worked with industry, the Investment Association, and the Monetary Authority of Singapore through Project Guardian[15] to develop proposals for fund tokenisation.

An example of how we’ve long played a central role in shaping global standards.

That won’t change. But in today’s world, we must supplement our approach with stronger bilateral relationships.

With several new trade deals, and the Berne Agreement coming into effect next year, we should be ambitious about making the most of these for financial services.

We’ve posted a Director in the Asia-Pacific region[16], as well as colleagues in Washington and Brussels, to help identify and realise opportunities, with more to come.

Conclusion

I opened with an important question: What kind of market do we want to be?

It’s one we must all ask and answer together.

We’ve looked in the mirror and seen some challenges. But also real strength, deep resilience and huge potential.

This is a moment of opportunity for the UK.

A chance to build on what makes us distinctive – talent, openness, integrity. And to do so with purpose and ambition.

The FCA will do its part: working at pace to keep markets clean, connected, confident.

So bring us your ideas. Share your insights. Keep challenging us to do better.

Because how we answer that question together and execute at pace, will define the UK’s future in global finance.