FCA Strategy and Reform Package: a busy summer ahead

Who this blog is for

Board members, senior executives, compliance, and regulatory affairs teams within firms regulated by the FCA.

At a glance
 

• The FCA has published its five-year Strategy for 2025-2030 alongside a Feedback Statement (FS 25/2) on reviewing FCA requirements following the introduction of the Duty.
• The FCA expresses its commitment to effect change to support the growth and competitiveness agenda. The tone and overall sentiment of the strategy document is one of positive engagement with industry to foster growth and innovation while removing regulatory barriers to growth where possible.
• The FCA highlights it will “take a more flexible approach with less intensive supervision for those demonstrably seeking to do the right thing”. However, the FCA does not expand on the criteria it will apply to identify those that are seeking to do the right thing.
• In practice, firms can expect a more tech-positive approach from the regulator as well as the removal of redundant and out of date guidance and rules. The FCA plans to make better use of data in its approach to supervision although the concept of a data-led regulator dates back to its 2020 data strategy. Additionally, the FCA is shifting towards re-establishing dedicated contact points for some firms, moving away from a call centre model.
• The Feedback Statement outlines a wide range of proposals the FCA is committed to pursue or to investigate further with industry, ranging from mortgage rules review, commercial insurance consultation, clarification of retail customer definitions, and value assessment review in asset management. A comprehensive Table and Timeline, providing a detailed breakdown of these proposals, is included in this analysis.
• The summer ahead will be very busy with the FCA both consulting and engaging with industry on its proposals for change. This is in addition to the very heavy pipeline of FCA reviews and market studies currently underway or planned. An update on the change programme will be published in September 2025. Firms need to be prepared to engage to make the most of this unique opportunity to shape the UK conduct landscape.

The FCA’s five-year strategy in a nutshell: enabling growth

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:

1. Smarter regulator: improving processes and embracing technology to be more efficient and effective.
2. Support growth: enabling investment, innovation, and ensuring the continued competitiveness of the UK FS sector.
3. Help consumers: boost trust, product innovation and ensuring the right information and support are available.
4. Fight crime: disrupt criminals and support firms to be an effective line of defence.

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.

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.

What will be different under the new strategy?

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:

• Fewer priorities: the FCA states it will “reform how we regulate and supervise firms” – it plans to have fewer priorities that will carry greater impact.
• Contact points: the FCA's move to reinstate dedicated contact points for more firms, rather than relying solely on a call centre, will be a welcome change for many. This shift will restore a direct line of communication with regulatory teams, which had been lost by many firms in recent years. It is worth noting the strategy is silent on how the FCA will fund this change.
• Streamlining the way supervisory priorities are set: the FCA plans to publish a few market reports once a year detailing regulatory risks and opportunities.
• Insights sharing: the FCA plans to share more insight arising from its supervisory work to help firms learn from each other.
• Launch of Open Finance: The FCA’s ambition for Open Finance is clear in its new strategy, with a rollout roadmap expected by March 2026. As we anticipated, the FCA will take a phased approach, prioritising small business lending use cases first. The regulator expects “the regulatory foundations” for this scheme to be in place by end-2027.
• Stripping out redundant requirements: reforming rules to suit the market, removing redundant requirements in the commercial insurance space including out of date publications such as guidance on mortgages, consumer finance and Treating Customers Fairly (TCF) and retiring old Dear CEO and portfolio letters pre-2022.

Unpacking the Feedback Statement:

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

Conclusion

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.