Regulatory Influencer: How the FCA Plans to Deliver on Its Four Priorities in 2025/2026

On March 25, 2025, the UK’s Financial Conduct Authority (FCA) published its five-year strategy from 2025–2030. In its strategy it stated that it will focus on four priorities, which are:

• Be a smarter regulator.
• Support sustained economic growth.
• Help consumers navigate their financial lives.
• Fight financial crime.

Following on from the publication of its strategy, the FCA published its annual work programme on April 8, 2025, which details how the FCA will deliver on its four priorities in 2025/2026. 

The Bigger Picture

With respect to the four priorities, the FCA has indicated the actions it will take in order to achieve them.

Be a smarter regulator

• Streamline data collection and improve regulatory interactions, which includes consulting on returns it is considering removing and making it easier for firms to view their regulatory returns and invoices in one location (My FCA) platform.
• Digitise and improve its authorisation process by continuing to simplify the way it asks firms to submit applications.
• Enhance its supervision model, which includes focusing on a smaller number of priorities and being more flexible with firms seeking to do the right thing.
• Improve how it uses intelligence and data to spot and act on harm, which includes simplifying its triage process to focus on higher risk cases and expand the use of data and intelligence to identify and act on the riskiest firms.
• Optimise its operational performance, which includes using deeper insights on its operational performance and making its regulatory delivery, operations and processes more transparent, accountable and aligned to strategic objectives. 

Support sustained economic growth

• Unlock capital investment and liquidity and support growth in the wider UK economy, which includes accelerating a review of capital requirements for specialised trading firms.
• Accelerate digital innovation to improve productivity, which includes working with the Payment Systems Regulator and partners to deliver the National Payments Vision, which includes a new open banking payment method (variable recurring payments).
• Reduce the regulatory burden, which includes streamlining data collection and improving regulatory interactions.
• Make it easier for financial services firms to start up and grow, delivering more innovative and productive financial services, which includes indicating more frequently that it is “minded to approve” promising start-up firms, to help them secure funding.
• Improve the UK’s exports and inward investment, which includes establishing a presence in the United States and in the Asia-Pacific region.

Helping consumers navigate their financial lives

• Work with the government to bring deferred payment credit (DPC) into its regulatory regime by developing a rules framework to replace the disapplied Consumer Credit Act provisions on information disclosure. This will be so that consumers can use buy now, pay later (BNPL) products appropriately to help them navigate financial shocks and flexibly manage their spending and budgets.
• Support firms that are developing solutions through the FCA’s innovation services, engaging with industry and broader stakeholders and considering further collaboration, partnership and research. 

Fight financial crime

• Identify financial crime through building a new data-led detection capability to bring together multiple data sets. This includes tackling money laundering through the financial system.
• Tackle organised crime through increased collaboration with partners to share and analyse data, working together to remove the gaps where criminals hide. This includes drawing on strong relationships with domestic law enforcement and regulators, as well as international counterparts, to share intelligence and coordinate action.

Why should you care?

For the purposes of this regulatory influencer, we will focus on a few key points in two key areas, namely: be a smarter regulator; and support sustained economic growth. 

Be a smarter regulator

As part of this initiative, the FCA has already commenced work in terms of streamlining data collection. On April 16, 2025, the FCA published a consultation paper (CP25/8) which identified three regulatory returns as viable for decommissioning. The FCA has indicated that it has identified further returns it is considering to remove and it plans to consult on them in Summer 2025. As a result, firms should keep abreast of consultations being published so that they can identify any impact on their business. 

The consultations could indicate the following to firms:

• Amendments to a firm’s reporting schedule, resulting in an update to any in-house regulatory reporting/deadlines calendar.
• Removal of regulatory returns, which may mean that firms no longer need to collate data they previously collated.
• Consolidation of regulatory returns.  In May 2025, the FCA published a policy statement (PS25/3) which introduced a new return for consumer credit firms with certain permissions, which replaces two existing returns.
• Amendments to reporting dates. In the FCA’s policy statement (PS25/3), it mentioned adjusting reporting schedules so that they are no longer tied in with a firm's accounting reference date.
• A need to review existing systems to ensure they are suitable for any change in regulatory returns. 

The FCA has also already commenced work in terms of enhancing its supervision model. From April 30, 2025, the FCA has stopped issuing and publishing portfolio letters. As a result, heads of compliance/money laundering reporting officers (MLROs) and senior management should be aware of this change in the supervisory communication approach. The FCA will now:

• Publish a small number of market reports. The market reports will include communications relevant to different types of firms and insights from the FCA’s supervisory work.
• Make it easier for firms to find up-to-date supervisory communications on its website by retiring historical portfolio letters and Dear CEO letters.
• Still use Dear CEO letters to address senior people management about significant issues that require action. 

Support sustained economic growth

On April 24, 2025, the FCA published its consultation paper (CP25/10) which proposed changes to regulatory capital (own funds) with respect to trading firms. The consultation paper proposes to simplify the capital requirements as currently they are based on the UK Capital Requirements Regulations (UK CRR), which are tailored towards banks. By simplifying rules around capital requirements this could:

• Make capital requirements simpler to understand for investment firms.
• Lead to an adjustment in existing firms’ capital requirements, resulting in firms having to update their financial forecast/regulatory capital computation models.
• Lead to firms needing to review the composition of their own funds structure (Common Equity Tier 1, Additional Tier 1 and Tier 2).
• Attract more investment firms to conduct business in the UK.
• Increase competition for existing firms in the UK. 

Although the focus has so far been around investment firms, with the Payment Services Directive 3 (PSD3) in the European Union on the horizon, it remains to be seen how the UK will address the current requirements of PSD2, which is currently followed by the UK, and whether capital requirements for UK payment institutions/electronic money institutions are amended. This is something firms in the payments sector should look to be aware of.  

There has been a noted shift in the FCA’s approach to firm authorisation. The change in approach can be linked to the UK government’s initiative of economic growth, which has cascaded down into the FCA. The FCA released a letter in response to the government’s approach, setting out the work it has underway and how it will go further to support growth. The FCA has committed to making it easier for firms to start up and grow, which has now started to result in the FCA indicating, more frequently, that it is minded to approve promising start-ups to help them secure funding. With that being said, firms who are seeking to be authorised should ensure that their applications are complete (providing the information that is requested as part of the application pack) and be ready, willing and organised. 

The FCA has a secondary objective to facilitate the international competitiveness of the economy of the UK and its growth in the medium to long term. As a result, the FCA has come up with a few  initiatives as part of improving the UK’s exports and inward investment. 

This has resulted in the FCA establishing a presence in Asia-Pacific (APAC) and the United States.

In the US, the aim is for the FCA to work closely with the Department for Business and Trade to advance UK-US financial services policy and regulatory cooperation, and support financial firms in the US to navigate UK regulation. This could result in more financial firms in the US entering the UK market due to the added support.  

In APAC, the aim is for the FCA to support financial services firms to navigate regulation to enter the UK market or raise capital and provide UK firms with support expanding into the APAC region. This could result in more firms in the APAC region entering the UK market due to the added support and, conversely, UK firms entering the market in the APAC region. 

To support firms with the authorisation process, the FCA has stated it is gradually moving applications to a new digital platform, which aims to make it easier for firms to use and more consistent with everything in one place. 

For crypto-asset firms, the FCA has indicated that it will extend its pre-application support service (PASS) as part of making it easier for firms to start up and grow. It has also indicated that it will invest in developing and implementing a proportionate and safe regulatory regime for crypto activities in the UK. In May 2025, the FCA released a discussion paper (DP25/1) on regulating crypto-asset activities, where it is seeking views on its proposals to regulate crypto-assets. Currently, firms that operate in the crypto-asset space are registered under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). As a result of these new proposals, crypto-asset firms should:

• Keep an eye on the developments in this space. The FCA has published consultation papers on: proposed rules and guidance for issuing a qualifying stablecoin, safeguarding qualifying crypto-assets and specified investment crypto-assets (CP25/14); and the prudential framework for crypto-assets and prudential requirements for qualifying stablecoins and safeguarding (CP25/15).
• Firms that are currently registered may need to seek authorisation to continue carrying out activities once the relevant legislation and regulations are in place.
• Keep in mind that once the legislation and regulations are in place, the FCA may provide a transition period whereby existing firms can continue to trade subject to an application being submitted by a specified date.
• Be mindful of any capital requirements that arise following the introduction of legislation and regulation.
• Be mindful of any additional restrictions the FCA puts in place (e.g., financial promotions).
• Update business plans/risk assessments/outsourcing registers in line with any application to become an authorised entity.
• Consider how they will meet the requirements of the Consumer Duty where they are permitted to deal with retail customers.
• Consider how senior managers will meet the fit and proper requirements (subject to the senior management function being allocated to senior managers of crypto firms). 
• Consider operational resilience requirements.  

The consultation papers are likely to be followed by policy statements, which will formalise the FCA’s policy in this area. 

The FCA has also committed to work with firms to support the adoption of artificial intelligence (AI) use cases. In April 2025, the FCA released an engagement paper on a proposal for AI live testing. The FCA is looking to obtain insights into what is needed to design, develop, evaluate and deploy safe and responsible AI in UK financial markets as part of economic growth.

Firms who currently use AI as part of their operations should:

• Consider participating in the FCA’s AI lab, subject to the criteria specified in the engagement paper.
• Respond to any consultations which contain proposals on shaping AI in UK financial services, such that they can provide insight and shape any future policy/regulation. 
• Ensure they have carried out risk assessments and have mitigants in place for any risks identified.