FCA Chief Nikhil Rathi to Appear Before Treasury Committee on Budget Agenda

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  Published in Business and Finance on Tuesday, December 16th 2025 at 9:05 GMT by London Evening Standard
      Locale: UNITED KINGDOM

The FCA’s Chief to Testify before the Treasury Committee on the Budget: A Deep Dive

In a key development that will shape the UK’s financial regulatory landscape for the next several years, the Financial Conduct Authority (FCA) chief executive, Nikhil Rathi, is slated to appear before the Treasury Committee on the House of Commons’ budget agenda. The scheduled hearing—part of the committee’s annual scrutiny of public finances—offers a rare window into how the FCA’s policy choices will dovetail with the Government’s fiscal strategy and the Office for Budget Responsibility (OBR)’s latest projections.

Who is Nikhil Rathi and why his testimony matters

Nikhil Rathi assumed the FCA chairmanship in March 2023, bringing with him a rich blend of experience from the Bank of England, the Treasury, and, most recently, a senior role at the OBR. Rathi’s tenure at the OBR sharpened his appreciation for the tight nexus between macro‑economic stability and micro‑prudential oversight—a perspective he now brings to the FCA’s remit. His testimony will therefore be a focal point for policy-makers looking to balance regulatory burden against the economic gains of a robust, consumer‑friendly financial system.

The Treasury Committee’s mandate and the OBR’s forecast

The Treasury Committee plays a pivotal role in the UK parliamentary process: it examines the Treasury’s policy proposals, the budget speech, and the OBR’s fiscal forecasts. In the most recent OBR update, the budget for 2025‑26 is projected to feature a deficit of roughly 5.5 % of GDP, driven largely by rising pension contributions and modest growth expectations. This fiscal backdrop will shape the committee’s questions to Rathi, particularly concerning how new FCA rules may impact the broader economy.

FCA’s key policy priorities on the agenda

1. Digital Finance & Fintech Regulation
   The FCA has already rolled out an expanded Regulatory Sandbox that allows fintech firms to test innovations under lighter regulatory oversight. Rathi is expected to outline plans for scaling this sandbox to include “new‑gen” payments, embedded finance, and digital‑only banks—a move that aligns with the Treasury’s broader objective of fostering innovation while safeguarding consumer protection.

2. Climate‑Related Financial Risk
   The FCA’s Climate‑Risk Policy is slated for a significant update. The Authority will likely present a revised framework that requires firms to disclose the environmental, social, and governance (ESG) risks they face and the potential impact on financial performance. Rathi will explain how the FCA intends to work with the Treasury and the OBR to ensure that climate‑risk measures do not unduly strain capital and credit markets.

3. Consumer Protection & Financial Inclusion
   In the wake of high‑profile fraud cases and increased scrutiny of retail credit, the FCA is advancing a suite of measures aimed at improving consumer understanding and reducing excessive debt. Rathi’s testimony will cover the impact of these reforms on small‑business lenders and the wider retail market.

4. Market Resilience and Infrastructure
   Post‑Brexit, the FCA has emphasized the need for robust market infrastructure—including settlement systems and derivatives clearing houses. Rathi will address how regulatory changes will maintain market confidence while accommodating the evolving trading ecosystem.

What the Treasury Committee is likely to ask

The committee’s questions will focus on:

• Regulatory costs vs. benefits: What is the projected economic impact of the FCA’s new rules on the UK economy? How do those costs compare to the benefits in terms of consumer protection and market stability?
• Coordination with the OBR: How will the FCA ensure that its regulatory agenda aligns with the OBR’s fiscal projections, particularly in a scenario of constrained public finances?
• Data and transparency: What mechanisms will be put in place to monitor the impact of new regulations, and how will the FCA share this data with Parliament?
• Climate transition: What specific steps will the FCA take to encourage firms to integrate climate risk into their business models, and how will this align with Treasury priorities on sustainability?

The broader context: links to key documents

While the Standard’s article itself does not embed clickable links, the underlying sources include:

• The FCA website (fca.org.uk) for policy documents and press releases on regulatory updates.
• The Treasury Committee’s official page (parliament.uk/committees) which houses transcripts of past hearings and the committee’s agenda.
• The OBR’s forecast (obr.uk) for the most recent fiscal projections, crucial for understanding the budgetary constraints under which the FCA’s policies must operate.

Implications for businesses, investors, and consumers

Rathi’s testimony will reverberate across a spectrum of stakeholders:

• Fintechs: New sandbox rules could lower entry barriers, potentially accelerating product launches but also raising expectations for regulatory readiness.
• Traditional banks: They will need to adapt to increased climate disclosure obligations, which may necessitate new risk‑management frameworks.
• Consumers: Enhanced protection measures—such as clearer credit disclosures—should reduce the incidence of predatory lending but might slightly increase borrowing costs.
• Investors: A clearer regulatory path on climate risk could improve the reliability of ESG‑related investment products, aligning with global trends.

Final thoughts

Nikhil Rathi’s appearance before the Treasury Committee is more than a routine regulatory briefing; it is a strategic checkpoint at the intersection of fiscal policy, macro‑economic stability, and the evolving demands of a digital, climate‑aware economy. As the UK grapples with a projected deficit and a shifting financial landscape, Rathi’s insights will help shape a regulatory framework that is both resilient and responsive. For stakeholders ranging from fintech startups to large banks, the forthcoming hearing will set the tone for the next era of UK financial regulation, underscoring the FCA’s pivotal role in steering the country toward a more inclusive, innovative, and climate‑sustainable financial future.