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The UK’s Financial Conduct Authority (FCA) has announced that growth will be a “cornerstone” of its new five-year strategy, alongside its primary objectives of consumer protection, market integrity and competition in the interests of consumers.
In its communications outlining the growth agenda so far, the FCA has shown a strong interest in deeper engagement with firms in key areas such as artificial intelligence (AI), open banking, open finance and digital assets.
These areas are seen as the biggest potential drivers of economic growth, which is why the FCA plans to devote more resources to them.
Start-ups, early and high-growth entities, and international firms seeking to access the UK market are also seen as future engines of economic growth.
Under the new five-year strategy, such firms will be allocated greater FCA support and oversight than previously.
Not all of these changes will directly affect compliance professionals, but some are designed specifically to assist them in their work.
A compliance-oriented reading of the FCA’s growth agenda is therefore essential for payment firms.
The bigger picture
The UK is in a period of regulatory change, with the FCA having committed to the government’s plan for growth.
In a January 2025 letter to the Prime Minister, the regulator’s CEO, Nikhil Rathi, wrote that, “We want to collaborate with you in a fundamentally different way to support the growth mission.”
Since then, it has implemented a number of initiatives intended to reduce the regulatory burden on firms operating in the financial services space, including removing the requirement that organisations have a board-level Consumer Duty champion.
In April, the regulator announced a major change in its supervisory communications, aiming to simplify how firms access key regulatory insights. It has discontinued portfolio letters, which had previously been a key communication tool used to outline regulatory expectations for different firm types.
Also in April, the FCA announced plans to support the safe and responsible adoption of AI in the UK’s financial markets, in the form of AI Live Testing.
The live testing service would allow firms to collaborate with the FCA while they check that their newly developed AI tools are ready for use.
In other areas, the FCA is increasing the level of regulatory support that it already offered to select firms.
For example, it plans to provide a dedicated authorisations case officer to every firm that takes part in its Regulatory Sandbox.
First launched in 2016, the Regulatory Sandbox is open to all firms that have a minimum viable product and want to test their proposition in a live market with real customers.
In a further show of support for these early-stage firms, the FCA has also said that it will indicate more frequently that it is “minded to approve” promising start-ups, to help them secure funding.
And the regulator has promised to provide 50 percent more supervisors to the firms within its Early and High Growth Oversight initiative.
In addition, the “My FCA” portal will offer a single-entry point for firms, allowing them to manage their regulatory obligations in one place.
Finally, the FCA will extend its pre-application support service (PASS) to all wholesale, payments and crypto firms that are seeking registration or authorisation in the UK.
PASS allows firms to discuss their plans and ask questions before submitting formal applications, helping them to align with regulatory expectations and increase their chances of approval.
Why should you care?
The FCA’s focus on growth will affect the way that it regulates firms in the UK payments industry, although the impact of the new secondary objective will vary significantly depending on the firm, its primary activities and its stage of development.
As outlined in its five-year strategy document, one of the FCA’s four priorities through 2030 is to be a “smarter regulator”.
This will entail more “direct contact points” with the firms that it regulates, and more initiatives that will make it “easier to engage” with the regulator.
In the near term, FCA-regulated firms should monitor announcements from the regulator to ensure they are clear on the following:
- Which regulation applies to them, and if there are any areas where the rules have been relaxed, easing their compliance burden.
- How the FCA plans to communicate with them, which may involve adapting their compliance processes to track broader regulatory signals from the watchdog.
- What support is available to them, including in the development of new tools and when applying for new authorisations.
Given that the FCA is prioritising more direct contact with the firms it regulates as part of its push for growth, organisations should be prepared, updating their processes and training staff accordingly.
The relationships firms have with the regulator are set to change; now, they should be thinking about what the future holds, and how the FCA’s growth can contribute to their own.
