The UK’s Financial Conduct Authority (FCA) is shifting its approach to market failures, moving away from making new rules its default response, the Financial Times Adviser reported.

FCA chief executive Nikhil Rathi, speaking on the Fairer Finance podcast, said “not every problem is going to be solved quickly by doing big interventions, more rules, bans, guidance”.

Rathi linked the change in approach to the post‑Brexit regulatory environment, in which the FCA is reassessing rules inherited from the EU.

He noted that several developments are shaping the regulator’s stance.

Rathi was quoted by the publication as saying: “One is consumer duty itself, and that came before the secondary objective – we said all the way from the beginning, we are moving to an outcomes-based approach that will mean less rules in the future because we think the consumer duty will do a lot of the work for us.

“The secondary objective and the broader agenda is around regulatory modernisation and looking at burdens around data reporting and compliance, and that is obviously something that we are thinking about as well.

“Thirdly, these markets are moving fast – the frontier of technology, particularly AI, is shifting every few months.”

On mortgage lending, he highlighted the potential strain on borrowers if rates climb.

The FCA CEO also shared concerns about retirement outcomes, saying it is not good for society when people retire on incomes below the living standards they expect while much of their wealth is tied up in housing.

Rathi was also asked about the FCA’s use of Voluntary Requirements, which can impose tailored conditions on companies.

Addressing how visible these actions should be, he said: “The Treasury weren’t secret about their view that they weren’t a big fan of transparency, about our actions when it came to firms.

“They were very persuaded by some of the lobbying they received on that topic. Nonetheless, we are stepping up the way in which we communicate through our enforcement watch.”

Rathi’s comments on reduced rule‑making drew concern from some industry voices, who warned that many companies may not be equipped to cope with looser oversight.

“Whilst many firms will welcome reduced rules, the reality is that they are poorly prepared for the consequences of a deregulated world,” said Kenny MacAulay, CEO of Acting Office, a software platform for accountancy practices.

MacAulay added: “Reduced compliance protocols means immediate pressure on firms to get their houses in order, in terms of mitigating cyber risk and managing data securely.

“With so many organisations overseeing complex IT estates with a mishmash of AI applications and unused software, the opportunity for error is immense.”