This blog post was first published in Law360 on April 22, 2025.
Supporting growth, fighting crime, helping consumers and being a smarter regulator: These are the four predictable priorities identified in the Financial Conduct Authority's 2025-2030 strategy document, released on March 25.1
Delve a little deeper into the strategy and regulated firms can also find some less predictable, but welcome messages.
These include a commitment to taking a more flexible approach to supervising the largest firms, the removal of redundant requirements in areas such as commercial insurance and asset management, as well as forthcoming reviews.
There will be a review of information requested by the regulator and the scrapping of some regular data returns, ensuring that the FCA only collects information it needs and will use, and a forthcoming review of the redress regime.
The FCA acknowledges that the current regime can create uncertainty for consumers, firms and their investors, potentially stifling investment and innovation.
The FCA's secondary objective of promoting international competitiveness and growth is evident throughout, likely in response to recent criticism that the regulator was failing to give this objective sufficient weight.
One example of this objective being at the fore is the FCA's repeated message in the strategy that it wants to avoid unduly burdensome regulation, and the perceived hindrances to growth that this entails. As a result, it seems likely that the regulator will take a less interventionist approach to regulation in the near future.
However, regulated firms should make no mistake, the strategy contains several promises of assertive action where the risk of harm is greatest. The FCA will undoubtedly continue to take action through supervision and enforcement when it deems necessary.
Overall, the messages conveyed in the strategy are positive signs that the FCA is willing to engage with, and listen to, criticism, when well-founded. Indeed, another theme announced is the regulator's desire to be collaborative and forge productive links with government, industry, international partners and other regulators.
This seems to ring true at present, at least in relation to major proposed policy changes, such as its so-called naming and shaming enforcement proposals, which were abandoned on March 11.2 Only time will tell whether the FCA's stated intentions are borne out in practice
Fighting Financial Crime
Financial crime has been singled out as a focus of both supervision and enforcement, as it was in the FCA's previous 2022 to 2025 strategy.3
The regulator's clear and continuing message in the current strategy document is that fighting financial crime remains a top priority, stating, "we'll draw on all the tools at our disposal to get the best outcome we can, from public warnings, formal requirements on firms, civil action or criminal prosecution."4
Further, the FCA explicitly warns that it will act against those firms through which criminal funds enter the U.K. financial system. Firms should therefore prioritize investment in their anti-financial crime systems and controls accordingly.
The FCA's focus in its strategy is on slowing the growth of investment and authorized push payment fraud. The regulator also commits to improving its use of generative artificial intelligence, processing information faster, uncovering new insights and improving decision-making.
Firms should ensure that their technological capabilities are enhanced in line with the market, and are adapted to respond to the emerging financial crime risks from the ever-sophisticated use of technology by criminals.
Helping Consumers
The FCA's work to assist consumers is underpinned by the introduction of the consumer duty under the 2022-2025 strategy. While not explicitly stated, firms should expect continued supervisory engagement with the regulator about their implementation of the duty, assessment of their own practices and benchmarking against other firms.
The successful implementation of the consumer duty is fundamental to the FCA's work, as two of its four operational objectives relate directly to consumers: providing appropriate protection for consumers and promoting effective competition in consumers' interests. It seems likely that we will see enforcement outcomes regarding the consumer duty over the next few years.
Firms would be well-advised to ensure that they continue to devote sufficient time and resources to compliance with the consumer duty, regularly making enhancements to take account of updated regulatory guidance and published best and poor practices.
Supporting Growth
The FCA aims to enable investment and innovation, and to ensure the competitiveness of financial services in the U.K. by reforming and reviewing its rules over the next five years. The regulator has explicitly identified the following examples:
- Changing disclosure requirements;
- Supporting technological advancements, including the use of AI;
- Reviewing the redress regime to address the uncertainty for consumers, firms and their investors potentially created by the current regime; and
- Removing redundant requirements in areas like commercial insurance and asset management, where the U.K. is a world leader.
While these are certainly steps in the right direction, the U.K. financial services industry would benefit from clarity on any redundant requirements and the review of the redress regime as soon as possible. Where requirements have been deemed redundant by the regulator, they should be removed quickly and efficiently, in line with the strategy, such that firms can focus on compliance with the FCA's ongoing priorities.
Being a Smarter Regulator
The FCA commits to becoming more predictable, purposeful and proportionate, which will be welcomed by all those it regulates.5 The regulator will improve processes and embrace technology to become more efficient and effective, the aim being to enable it to act faster and more assertively where there is the greatest risk of harm.
This is yet another example of the FCA listening. The FCA has long faced criticism that it takes too long to take action or indeed assess whether it needs to take action, whether through supervisory engagements or unnecessarily lengthy enforcement investigations.
The FCA is also intending to amend its supervision of firms. It plans to reform its supervisory programs for the largest regulated firms by moving to a more flexible approach, with less intensive supervision for those "demonstrably seeking to do the right thing." It also undertakes to ensure firms have more direct contact points with the regulator, allowing firms earlier opportunities to enhance compliance without the need for regulatory action.
The FCA also states that it will streamline the setting of its supervisory priorities, publishing a small number of market reports annually.
Further, the FCA plans to share more insights from its supervisory work and ensure it only collects the data it requires. The regulator has already identified three regulator data returns it plans to stop, which will affect 16,000 firms, and it has committed to reviewing more.
Details of the flexibility promised with the FCA's new supervisory approach are as yet unclear, as are the requirements for a firm to be deemed as "demonstrably seeking to do the right thing."
Credit, in all its forms, has historically been difficult to gain from the FCA, requiring significant concessions on the part of regulated firms for little tangible benefit. Examples include the waiver of legal professional privilege and early proactive, detailed FCA Principle 11 disclosures, which can then be used by the regulator and characterized as it sees fit, including in open court.6 Further insights from the FCA in this regard would be helpful.
The FCA has also said it will focus on rebalancing risk. The introductory remarks from FCA Chair Ashley Alder in that regard are telling, noting that the regulator will be looking again at its collective attitude to risk.
This is expanded upon later in the strategy, with the stated aim that regulation should enable informed risk to be taken. These are more welcome messages from the regulator, but many will be skeptical as to exactly how tolerant of risk the FCA will be.
On enforcement, the FCA has promised a streamlined portfolio of cases, with the same number of outcomes, delivered faster. While this is certainly a welcome development, many will hope that faster outcomes do not come at the cost of due process and proper investigating.
International Cooperation
The FCA has stated that national cooperation among regulators and law enforcement agencies, together with international cooperation, is key, particularly in relation to the fight against financial crime.
It is not only the FCA that is focused on international cooperation. On March 20, the U.K.'s Serious Fraud Office, France's Parquet National Financier and the Office of the Attorney General of Switzerland announced a shared commitment to tackling bribery and corruption.7
Regulated firms should expect an increasingly coordinated approach among regulators internationally regarding financial crime, in both supervision and enforcement action.
Further, international financial services firms should avoid taking a siloed approach to financial crime in each jurisdiction, and should ensure that their anti-financial crime systems and controls are functioning, not only in each jurisdiction, but also across borders, when required.
The strategy also states that the FCA will be establishing a permanent presence in the U.S. and Asia-Pacific for the first time, signaling that the FCA sees the future as depending on strong bilateral relationships.
Conclusion
The FCA's new strategy outlines a vision of deepened trust and rebalanced risk to support growth and improve lives. This is cause for cautious optimism about the regulator's actions over the next five years.
Its plans for less intrusive supervision, a more open and collaborative approach, and a focus on assertive action where there is risk of greatest harm and on financial crime, are all commendable strands of the new strategy.
Indeed, the regulator seems to have turned a corner and has been making all the right noises over the last few months. For example, in March, the FCA aborted its controversial plans to announce enforcement investigations at an early stage after heavy criticism from commentators across the board. This culminated in the U.K. House of Lords Financial Services Regulation Committee's damning report, titled "Naming and shaming: how not to regulate,"8 published on Feb. 8.
As with all high-level strategies, the devil will be borne out in the unpublished details and practical implementation of the strategy in the months and years to come. In my view, firms should take steps to prepare themselves for FCA supervision and enforcement over the next five years.
Firms should prioritize investment in anti-financial crime systems and controls. This has long been an area of focus for the FCA, with regulatory guidance on financial crime risks regularly updated.
There is also a constant flow of enforcement outcomes regarding financial crime. Firms should ensure that their systems and controls are continuously updated and recalibrated to counter emerging financial crime risks. Failing to do so is likely to result in supervisory or enforcement action.
Firms must continue focusing on the consumer duty and not deprioritize it post-implementation. The FCA is likely to continue its focus on the consumer duty in supervisory and enforcement contexts.
It is also important that firms monitor ever more closely for regulatory developments affecting business. The FCA is clearly intending to abolish certain of its requirements in a bid to support growth and promote the competitiveness of the U.K. financial market.
A focus on the same data points and requirements as the FCA is also advised, rather than expending unnecessary time and resources on redundant requirements. Firms are encouraged to take supervisory engagements seriously, and take the time to respond to information requests in a comprehensive and clear manner. This will mitigate the risk of engagements escalating unnecessarily.
Finally, firms can ensure that senior management is aware of the FCA's priorities and updated guidance, so that they can take any steps necessary to ensure compliance. Any decisions taken, or enhancements made, should be carefully documented, including a rationale.
1 https://www.fca.org.uk/publication/corporate/our-strategy-2025-30.pdf.
2 FCA letter to Treasury Select Committee, dated 11 March 2025: https://www.fca.org.uk/publication/correspondence/letter-enforcement-diversity-tsc.pdf.
3 https://www.fca.org.uk/publication/corporate/our-strategy-2022-25.pdf.
4 FCA Strategy 2025-2030, p 18.
5 Ibid., p 5.
6 FCA Principle 11: A firm must deal with its regulators in an open and cooperative way, and must disclose to the FCA appropriately anything relating to the firm of which that regulator would reasonably expect notice: https://www.handbook.fca.org.uk/handbook/PRIN/2/1.html.
7 https://www.gov.uk/government/news/uk-france-and-switzerland-announce-new-anti-corruption-alliance.
8 https://publications.parliament.uk/pa/ld5901/ldselect/ldfsrc/76/76.pdf.
