There has been some useful feedback from the FCA recently which gives an insight into what they are currently considering, and how that may impact on you.

In a recent interview, Nikhil Rathi set out the FCA’s current thinking across premium finance, enforcement, commissions and regulatory approach. We’ve summarised the key point below.

Premium Finance Market Study

Mr Rathi rejected suggestions that the FCA had been ‘soft’ in it’s Premium Finance Market Study. He cited: 

• £157m of savings achieved as a result of FCA pressure on firms to reduce APRs
• The view that this supervisory approach delivered outcomes more quickly than introducing new rules, which could take years to implement
• The importance of premium finance in helping consumers to access insurance where they may not have been able to afford to pay the premiums in full up front
• His position that the wider issue of lower-income families paying more is a matter for Government, or wider society, rather than solely for the FCA#

The good news is that he did not indicate that new premium finance rules are forthcoming.

Motor Finance Redress Scheme

During the interview, Mr Rathi didn’t provide any detail on the proposed redress scheme, nor did he confirm any specific direction of travel regarding lenders or customer communications. He did stated that the final outcome would not be the same as the consultation.

Commissions and Other Markets

When questioned about whether motor finance commission issues might extend to other markets, Mr Rathi:

• Stated there is no read-across from motor finance commissions to other sectors
• Ruled out wider FCA work on commissions (such as protection), noting that business models and market structures differ across sectors
• Said the FCA would rely on the Consumer Duty and Fair Value requirements rather than cross-sector commission reform

Approach to Enforcement

At the suggestion that the FCA had become timid on enforcement, Mr Rathi maintained that the FCA had not ‘gone soft’ and pushed back pointing to:

• The FCA selecting which cases to prioritise
• The number of quicker enforcement outcomes
• The Enforcement Watch newsletter which is evidence that the FCA remains active in areas such as Consumer Duty and insurance.

Overall, Nikhil Rathi’s comments in the interview show that:

• The FCA prefers achieving outcomes through supervision, rather than creating new rules
• Consumer Duty and Fair Value remain central to regulatory expectations
• Enforcement activity continues, although the FCA is selective in how it deploys its tools
• The FCA is trying not to write new rules unless it absolutely has to

Regulatory Priorities Report

As part of the FCA being a more transparent regulator it has replaced the portfolio letters with more succinct Regulatory Priorities Reports and the Insurance Sector premieres this with the first one!
They are ‘committed to being a smarter regulator – predictable, purposeful and proportionate’. Following on from their policy statement on simplifying the insurance rules in December 2025, the report confirms that the FCA intends to keep rules under review, reducing requirements, but maintaining consumer protection. This year, as well as simplifying insurance rules further, the FCA will ‘review our regulatory returns to make sure we only ask firms for what we need’

Source: FCA Regulatory Priorities: Insurance

The report discusses what the FCA has done in the market. In addition to highlighting the £157m of  consumer savings referenced above for premium finance, they share other areas of their work:

• Underpayment of Motor Total Loss claims
• Reduced costs for consumers on GAP insurance
• Reduction in price walking that penalises loyal customers
• Data published from their review of non-financial misconduct
• Promotion of growth from work with the industry
• What steps can be taken to simplify regulations now that the Consumer Duty is in place