Ministers face succession headache at financial watchdogs
The Treasury faces the prospect of kicking off the hunt for new chief executives at both the FCA and PRA within months amid speculation that the former’s boss, Nikhil Rathi, will not serve a second term, Sky News learns.
Ministers are facing the prospect of kicking off searches for new bosses for the City and banking watchdogs within months amid plans for a wider shake-up of Britain’s economic regulators.
Sky News can reveal that the Treasury is likely to begin a process to recruit the next chief executive of the Financial Conduct Authority (FCA) in the first quarter of 2025, with Nikhil Rathi regarded as increasingly unlikely to seek a second term in the job.
Mr Rathi, whose first five-year term comes to an end next autumn, has had to contend with an often-difficult relationship with the government, with public rows about its enforcement regime and approach to economic growth punctuating his tenure.
Meanwhile, Sam Woods, the PRA chief and deputy governor of the Bank of England, will have to step down by the middle of 2026 after serving two terms in the post.
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Sources have told Sky News that Rachel Reeves, the chancellor, will use her Mansion House speech later this week to announce changes to the remit of the financial regulators to ensure they have a greater focus on promoting Britain’s competitiveness and growth.
The move is likely to face criticism from some quarters, with concerns over the safety and soundness of the UK financial system and the conduct of its biggest companies still the priority for those opposed to a loosening of the regulatory climate.
The Treasury declined to comment on Ms Reeves’ intention to announce any changes to the FCA and PRA remits on Thursday evening.
In a statement, a Treasury spokesperson said: “The current CEO of the Financial Conduct Authority has a term running until 30 September 2025, and the Prudential Regulation Authority (PRA) CEO’s term expires in June 2026.
“The recruitment process for the next term will be outlined in due course.”
The potential need to find new leaders for both the FCA and PRA will present the chancellor with a twin challenge as she battles to convince key stakeholders that the Labour administration is focused on driving growth in the aftermath of the Budget.
Sir Keir Starmer said in a speech at the recent International Investment Summit that he wanted the UK’s economic regulators, including the Competition and Markets Authority, to augment the government’s growth objectives.
Sky News revealed at the weekend that hospitality chiefs were writing to Ms Reeves to protest at the employers’ national insurance hikes announced in her inaugural fiscal statement last month.
Treasury officials have been briefing in recent days that the chancellor plans to champion economic growth and free trade in her speech at Mansion House.
She is expected to pursue reforms to public sector pension pots initiated by Jeremy Hunt, her predecessor.
The potential vacancy at the helm of the FCA is already the subject of growing speculation in the City.
If Mr Rathi does leave next year, one of the likely candidates to succeed him would be Mr Woods, who played an important role in delivering the banking reforms introduced after the 2008 financial crisis.
Remaining in a top regulatory job in the UK could then position him to succeed Sir Andrew Bailey, the Bank of England governor, when he steps down in 2027, according to some industry executives.
However, some are expected to advocate the recruitment of an outsider to the FCA job, given that Mr Woods would be likely to serve for only two years if he was appointed.
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Ashley Alder, the former boss of the Hong Kong financial watchdog, is the current FCA chair.
Mr Rathi has been linked with a number of government jobs since the election, but it remains possible that he could stay at the FCA for a second term, officials cautioned on Monday.
Neither the FCA nor PRA responded to Sky News’s enquiries about the leadership of the two organisations.
