Regulating for Growth: The FCA and the Bank of England on Innovation and Risk
Introduction
In the space of just two days, three senior figures at the Financial Conduct Authority (FCA) and the Bank of England offered a coordinated message: growth and innovation are not only compatible with regulation, but dependent on it.
On 17 September 2025, Kate Collyer, the FCA’s Chief Economist, spoke about “rebalancing risk to facilitate innovation and growth.” A day later, Vicky White, Director of Competition at the Bank of England, addressed “balancing innovation and risk.” Later that same day, Jessica Rusu, the FCA’s Chief Data, Information and Intelligence Officer, delivered a forward-looking speech titled “regulating for growth: the future is now.”
The consistency of language and timing is no accident. Collectively, these speeches signal a shared regulatory intention to reframe how the UK authorities are perceived: not as brakes on innovation, but as enablers of responsible growth.
Rebalancing Risk
Collyer opened by challenging the assumption that risk is something to be minimised at all costs. Innovation, she argued, is inherently uncertain. “If the UK wants to remain a competitive global financial centre, regulators must be prepared to tolerate some level of risk - provided it is managed appropriately.”
That shift in tone matters. For years, many firms have felt that the UK’s regulatory environment constrained innovation through a preference for stability over experimentation. Collyer’s remarks point towards a more balanced approach: risk will still be scrutinised, but not to the point where it stifles opportunity. She highlighted the FCA’s Digital Sandbox and Innovation Hub as proof that the regulator can support experimentation within defined boundaries. By offering firms a safe space to test ideas, the FCA hopes to give innovation oxygen while protecting consumers.
Guardrails, Not Roadblocks
Picking up the theme, Vicky White emphasised the role of competition in driving innovation. Markets only thrive, she argued, where firms are free to test new models and challenge incumbents, but competition without safeguards can lead to harm. The Bank of England’s role, therefore, is to act not as a roadblock but as a provider of “guardrails.” White’s message was that effective oversight can give firms confidence to innovate, by creating a level playing field and ensuring consumer protection.
Vicky White pointed to payments, digital platforms and data-driven services as sectors where these tensions are particularly acute. These markets are moving at speed, with new entrants bringing fresh ideas - but also new risks. By balancing innovation with protective frameworks, regulators believe they can enable growth without undermining trust.
The Future is Now
The day’s closing message came from Jessica Rusu, who focused less on firms and more on the regulator itself. The FCA, she said, is not just regulating innovation - it is innovating in how it regulates.
Rusu described the agency’s increasing use of advanced analytics and artificial intelligence to identify risks earlier and act faster. By embedding technology in its supervisory work, the FCA hopes to keep pace with markets that are themselves becoming ever more data-driven. Her call to action was directed at firms as much as regulators: “Future readiness means investing today in governance, culture and data capabilities.” Firms that fail to do so risk being left behind, both commercially and in meeting regulatory expectations.
A Consistent Message
Viewed in isolation, each speech offers useful insight. Taken together, they amount to a carefully choreographed statement of intent. The UK’s regulators want to be seen as pro-growth and pro-innovation, but with an emphasis on responsible risk management and strong consumer protections.
The key messages can be distilled into four themes:
- Innovation is essential. Regulators accept that innovation is vital to competitiveness and economic growth.
- Risk must be managed, not eliminated. A degree of risk is tolerable, provided firms demonstrate effective oversight.
- Technology is central. Both regulators and firms must embrace digital tools and data-driven models.
- Engagement matters. Initiatives like the FCA’s Digital Sandbox and Innovation Hub are intended as gateways for early dialogue and responsible testing.
Implications for Firms
For financial services firms, the implications are significant. Regulators are effectively signalling that compliance is no longer about ticking boxes but about building the capacity to innovate safely. Firms should be asking themselves the following questions:
- Do our governance structures support experimentation whilst maintaining control?
- Are our risk frameworks calibrated to encourage innovation rather than inhibit it?
- How advanced are our data and analytics capabilities compared with regulatory expectations?
- Are we engaging early and proactively with the FCA and Bank of England when developing new products and services?
Those that can answer these questions positively will be better placed to capitalise on the UK’s ambition to be a hub for financial innovation.
Conclusion
The trio of speeches marks a clear step in the regulatory narrative. By emphasising growth, innovation and the intelligent management of risk, the FCA and Bank of England are seeking to reposition themselves as enablers of progress rather than constraints. For firms, the opportunity is real - but so is the responsibility. Innovation must be underpinned by resilient risk management, sound governance and a commitment to consumer trust. In the regulators’ words, the future is now.
