Board members, senior executives, compliance, and regulatory affairs teams within firms regulated by the FCA.
The FCA has just published its five-year Strategy (2025 – 2030) and the Feedback Statement to reviewing FCA requirements following the introduction of the Consumer Duty (FS 25/2). The FCA has identified four key priority areas within this strategy:
The publication of FS25/2 follows the Call for Input published in the summer of 2024 to which the FCA received 172 responses from a range of stakeholders. The feedback statement provides a roadmap outlining the changes the FCA is committed to pursue, new proposals to be discussed with industry and next steps. Below we include a sector- by-sector view of these proposals.
The FCA plans to apply an accelerated consultation process for proposals that have substantial stakeholder support, for example the regulation of commercial and bespoke insurance business. Additionally, it plans to review all Dear CEO letters and portfolio letters issued before April 2022 with the aim of withdrawing out of date publications. Further industry engagement is planned through an in-person summit this summer, with a progress update on these initiatives expected in September 2025.
The tone and sentiment of the strategy are notable for the emphasis on streamlining regulation and supporting growth.
Firms will be pleased to note the FCA plans to
take a more flexible approach with less intensive supervision for those demonstrably seeking to do the right thing.
This will mean that firms will need to put in place a well-considered regulatory engagement strategy, especially when things go wrong, with greater emphasis on demonstrating good governance and accountability, root cause analysis and clear, funded plans for remediating issues/ vulnerabilities. Firms already do this to some extent, but the benefits of doing it well become even more important if it is linked to decisions around the intensity of supervision.
Apart from the significant shift in sentiment compared to previous strategy documents, we identified a few areas that will be of interest for firms as it could result in changes in the way firms interact with the regulator:
The Feedback Statement outlines a range of initiatives that the FCA is either actively pursuing or planning to explore further through industry engagement and consultation. We have summarised these initiatives in the table below by sector and included those for which there are proposed dates into the timeline. The FCA plans to further discuss with industry the list of proposed actions to gauge the appetite for change.
While some streamlining initiatives, like retiring outdated guidance and letters, may result in limited process change from firms, other new initiatives present potential opportunities. The FCA's review of UK conduct rules’ international application within the insurance sector could signal a move towards easing the burden of complying with UK conduct standards for non-UK customers. This potential shift could not only reduce costs for firms but also spark similar conversations and reviews across other sectors.
For ease of reference, a comprehensive timeline of FCA initiatives with indicative timings is provided below:
Diagram: Timeline of key initiatives
Both the FCA's Strategy and Feedback Statement signal a clear commitment to advancing the government's growth and competitiveness agenda. While the more immediate pledges, such as retiring outdated guidance, are largely uncontroversial, their impact is likely to be limited. Other proposals, such as reviewing the application of conduct rules outside the UK and proposed changes to commercial insurance regulations, hold greater potential for significant impact but may take longer to come to fruition.
As the timeline above illustrates, it is shaping up to be an extremely busy summer for the FCA with an ambitious package of reform and industry engagement. This programme of activity is additional to the material number of reviews and market studies that are ongoing or in the pipeline. As a result, it will be a very busy summer for firms too as they prepare to respond and engage with the regulator throughout this process to make the most of the current opportunity while continuing to respond to requests stemming from various reviews and market studies.