What's changing under the FCA's strategic business plan?

On 25 March 2025, the Financial Conduct Authority (FCA) released its five-year business plan and signalled a shift towards a more streamlined and adaptive regulatory approach, aiming to create a smarter and more focused regulator.

The plan was split into four core areas with a reduced number of priorities, allowing the regulator to focus on more impactful priorities and enhance its ability to address key issues efficiently and effectively.

How will the FCA's five-year plan impact financial services firms?

A smarter regulatory approach

Flexible supervisory strategies: For larger firms, the FCA is moving away from a one-size-fits-all approach. This flexibility will allow resources to be allocated to the riskiest areas, enhancing the FCA’s overall supervisory effectiveness. This tailored approach means that supervisory strategies can be adapted to the specific needs and risks of individual firms, ensuring that regulatory efforts are concentrated where they are most needed.

Streamlined enforcement portfolio: The FCA's enforcement strategy is being refined, potentially indicating a shift in risk appetite or a focus on cases with higher prospects of success. This could lead to quicker, more impactful enforcement actions. By streamlining its portfolio of enforcement cases, the FCA may be aiming to improve its efficiency and effectiveness in tackling regulatory breaches, focusing on cases that offer the greatest potential for positive outcomes for consumers.

My FCA portal: The introduction of the My FCA Portal aims to simplify regulatory reporting and other business-as-usual activities, making it easier for firms to comply with regulations. This portal is designed to provide a user-friendly interface for firms to submit regulatory reports, manage fees and handle other routine regulatory tasks, thereby reducing administrative burdens and improving compliance.

Supporting growth and innovation

Reducing the regulatory burden: Feedback from firms has been that the regulatory reporting burden placed on them is onerous, with multiple requests for information that overlap at times. The FCA has committed to “streamline data collection and improve regulatory interactions” and has requested input from firms on where guidance can be streamlined now that the Consumer Duty is in place.

Smart data revolution: Building on the successes of Open Banking, the FCA is advancing towards 'Open Finance’, with a roadmap set to complete by 2027. This initiative promises to bring more detailed insights and innovations in financial services. Open Finance aims to extend the principles of Open Banking to a wider range of financial products, enabling consumers to access and share their financial data more easily and securely, fostering innovation and competition in the financial sector.

International approach: Recognising the global nature of financial challenges, the FCA has recently made two appointments in the US and Asia-Pacific regions. This move underscores the importance of international collaboration in addressing geopolitical uncertainties and market impacts. By establishing a presence in key global markets, the FCA aims to enhance its ability to monitor and respond to international developments, forge stronger relationships with global stakeholders, and better address cross-border regulatory challenges.

Enhancing consumer support

Product innovation and access: The FCA is reviewing mortgage affordability requirements to make it easier for consumers, especially first-time buyers, to purchase property. This aligns with government initiatives like the First Homes Scheme and the Lifetime ISA, which has been supporting young buyers to save for a first home with a 25% bonus of up to £1,000 per year. These efforts aim to make homeownership more accessible to younger demographics, who often face significant barriers in getting onto the property ladder due to high rents and stringent mortgage requirements.

Innovative lending assessments: The FCA supports the government's financial exclusion strategy, which aims to provide safe and affordable credit. Predictions suggest the FCA might endorse alternative data sources for lending assessments, such as rental and utility payment histories. This could lead to more personalised and inclusive credit decisions. By incorporating dynamic scoring models that take into account real-time financial activity, lenders can gain a more accurate picture of a borrower's ability to repay, potentially expanding access to credit for underserved groups.

Accessibility of financial advice and support: The FCA aims to make financial advice more accessible, breaking down barriers that have traditionally made it a ‘wealthy person's sport’. Simplifying the advice sector and encouraging better consumer conversations are key focuses of this effort. The FCA is likely to promote initiatives that make financial advice more approachable and less intimidating, encouraging consumers to seek advice and make informed decisions about their financial futures. This could come in the form of guidance for firms on how to embed financial education tools directly into digital platforms or the encouragement of fintech partnerships to develop accessible financial tools that help consumers manage debt more effectively, fostering financial inclusion and resilience.

Insurance and protection: The FCA emphasises the importance of consumer education in understanding insurance products. Simplifying terminology and ensuring fair value and competition are critical to this effort. The FCA may push for 'plain English' policies to ensure key terms are clearer, particularly around exclusions and renewal conditions, helping consumers make better-informed choices about their insurance coverage. Following the FCA’s announcement that it intends to look more deeply at the pure protection market, firms will likely face growing pressure to demonstrate the true value of their protection products to ensure consumers are properly informed. The Supreme Court’s ruling on the motor finance commission case will also likely impact redress schemes overall and set a precedent for the review of protection policies.

Combating financial crime

Technological advancements: The FCA is harnessing technology to combat financial crime, recognising the need for robust anti-crime systems. Collaboration with tech and telecom partners is crucial to disrupting crime networks. By leveraging advanced technologies, the FCA aims to stay ahead of bad actors who use sophisticated methods to perpetrate fraud and scams, ensuring that consumers are protected from financial crime. A recent example of this is Metro Bank’s announcement of its partnership with an AI scam detector tool. This tool will allow customers to more easily spot scams and protect them from fraud by scanning emails, websites or letters to determine their authenticity.

Balancing risk and protection: The FCA's focus on reducing crime while protecting consumers is a delicate balance. Smaller firms may face challenges in implementing advanced technologies, highlighting the need for supportive measures. The FCA's commitment to supporting firms in harnessing technology to reduce crime and costs is therefore welcomed, as it helps ensure that all firms, regardless of size, can effectively combat financial crime.

For more information on the impact of the FCA's five-year strategy on your business, please contact Erin Sims or Zoe Morton.