On March 25, 2025, the Financial Conduct Authority (FCA) published its 2025-30 Strategy outlining its vision to deepen trust, rebalance risk, support growth, and improve lives. Alongside this, the regulator released a Feedback Statement (FS25/2) responding to its July 2024 Call for Input on reviewing requirements in light of the Consumer Duty.
These publications signal a shift toward a more flexible, technology-friendly, and outcomes-based regulatory environment.
Key Strategy Themes
1. Creating a More Efficient and Effective Regulator
The FCA plans to transform its supervisory approach by:
- Reducing oversight intensity for firms “demonstrably seeking to do the right thing”
- Providing more firms with direct FCA contact points
- Streamlining supervisory priority-setting processes
- Reviewing data collection requirements to reduce burden on firms
2. Supporting Growth and Innovation
The regulator commits to:
- Adopting an “increasingly tech-positive approach”
- Focusing on outcomes rather than prescriptive rules
- Leveraging existing standards where possible
- Progressing Open Finance initiatives, beginning with small business lending
- Establishing regulatory foundations for the first scheme by end of 2027
3. Helping Consumers Navigate Financial Services
The FCA emphasises:
- Building trust through effective disclosure practices
- Leveraging the Consumer Duty to increase consumer confidence
- Providing appropriate support for consumer decision-making
- Reviewing specific rules (like mortgage affordability requirements) to enable product innovation and wider access
- Rebalancing regulatory risk approach, acknowledging that while most consumers will benefit from reforms like targeted support proposals, some may not achieve their desired outcomes
4. Fighting Financial Crime
This remains a priority with:
- Renewed focus on supporting technology-led systems and controls
- Ensuring consumers have tools to protect themselves
Additionally, the FCA acknowledges increasing international regulatory fragmentation due to geopolitical instability and indicates it may advance certain initiatives with smaller groups of like-minded jurisdictions.
Feedback Statement Overview: Simplifying Rules and Guidance
Reviewing Foundations
- Evaluating whether conduct rules should apply to firms serving non-UK customers, starting with the insurance sector
- Standardising core definitions for retail customers and SMEs
Future-Proofing Disclosure
- Increasing flexibility in retail banking disclosure requirements (including mortgages and savings)
- Enabling firms to tailor communications to specific customers and channels
Reducing Administrative Burden
- Consulting in summer 2025 on changes to commercial and bespoke insurance regulation
- Reviewing asset manager requirements for public reporting of value assessments
- Clarifying Consumer Duty application through retail distribution chains
Streamlining Requirements
- Piloting specific guidance for smaller firms later this year
- Clarifying historical supervisory communications by withdrawing most Dear CEO and portfolio letters issued before April 2022
- Exploring options to review the Senior Management Arrangements, Systems and Controls sourcebook
Implications for Firms
Embrace Technology-Enabled Compliance
Firms should consider leveraging technology to drive efficiencies and generate better insights in compliance and risk management functions.
Prepare for Greater International Divergence
Proactively monitor and mitigate the impacts of heightened geopolitical risk and regulatory fragmentation, especially for cross-border operations.
Explore Strategic Opportunities
- Transform processes and modernise legacy technologies
- Capitalise on new income streams through innovations like tokenisation
- Enhance customer journeys
- Develop new products and services through frameworks like open finance
Conclusion
The FCA’s updated strategy marks a significant shift in regulatory tone and approach. While further details are forthcoming, the regulator’s commitment to efficiencies and a technology-positive approach is encouraging.
As the FCA continues transitioning from prescriptive rules to principles and outcomes-based requirements, firms face greater accountability for interpreting and meeting the spirit of regulations while justifying their decisions and customer outcomes. The increased flexibility in disclosure rules exemplifies this shift, requiring firms to develop robust approaches to testing, monitoring, and adapting communications that support understanding and positive customer outcomes.
In this environment of heightened geopolitical uncertainty and potential regulatory fragmentation, businesses operating across borders must remain vigilant and ensure their UK operations fully align with the FCA’s expectations.