The FCA’s plans for the next 5 years: rebalancing risk, supporting growth

On 25 March 2025, the FCA published its new strategy for the next five years, with the stated goals of “deepening trust, rebalancing risk, supporting growth and improving lives”. It is a future-facing agenda, aimed at ensuring the UK thrives in a period of global uncertainty. As part of its strategy, the FCA has adopted the following priorities: 

1. Be a smarter regulator 
2. Support sustained economic growth
3. Help consumers navigate their financial lives
4. Fight financial crime

In this blog post, we look at each of these priorities in turn, and consider how the FCA’s plans fit in with the UK government's pro-growth agenda.

A smarter regulator 

The strategy says that the FCA will seek to be a “predictable, purposeful and proportionate regulator”, and become more efficient and effective by improving processes and embracing technology. 

In order to achieve this, the FCA intends to adopt a more flexible approach to supervision, with a light-touch regime for firms that are “demonstrably seeking to do the right thing”. The FCA also plans to implement direct contact points with more regulated firms, streamline how it sets its supervisory priorities—publishing just a few market reports once a year—and share more insights from its supervisory work. 

On the enforcement side, the FCA will look to streamline its portfolio of cases, with the goal of achieving the same number of outcomes, but more quickly.

In addition, the FCA will try to make its data requests more proportionate. It is also launching “My FCA”, a one-stop portal, to enable firms to manage all their regulatory tasks in one place. 

All of this is good news for regulated firms, who have long complained about the increasing cost and burden of complying with the FCA’s rules. It should also help the FCA meet its secondary objective of keeping the UK financial services sector competitive and boosting economic growth.

Supporting growth 

The strategy places a strong emphasis on fostering investment, encouraging innovation and promoting the competitiveness of the UK's financial services sector. As part of this priority, the FCA is rethinking its approach to risk. The Chancellor of the Exchequer, Rachel Reeves, has famously called on the UK regulators to start regulating for growth, not just for risk. The FCA says that regulation should be enabling informed risk rather than trying to eliminate risk entirely. 

At the macro level, this means giving firms space to innovate without jeopardising consumer protection, operational resilience, or financial stability. It also means emboldening consumers to move their cash from the safety of bank deposits into riskier investments that could result in higher returns—or greater losses. The FCA’s reforms of the financial advice market may help facilitate this switch.

The FCA stresses that this is not just about “getting out of the way”. It is about rebalancing risks rather than a race to the bottom. Interestingly, and in contrast to the approach taken by the EU, the FCA has also reiterated its commitment to rely on existing standards, focused on outcomes, instead of introducing prescriptive rules to respond to technological changes such as AI. 

Now that the Payment Systems Regulator (PSR) and many of its functions will be integrated into the FCA (following the government’s announcement on 11 March 2025 of its intention to abolish the PSR), the FCA will seek to deliver the National Payments Vision that was set out by the government in November 2024 (for more information on that, see our briefing on the Chancellor’s Mansion House speech). The FCA is also committed to launching Open Finance, building on the historic success of Open Banking. The FCA intends to publish a roadmap for the roll out of Open Finance within the next year, and it expects the regulatory framework for its first scheme to be in place by 2027.

The FCA also plans to reform its Handbook. Following a review of its rules in light of the Consumer Duty, the FCA recently announced that it will start stripping out redundant requirements in areas like commercial insurance and asset management. For more information, see our blog post.

In addition, the FCA has promised to review the redress regime, following calls from the Chancellor for the FCA and the Financial Ombudsman Service to work more closely together. A call for input on modernising the redress system closed in January, and next steps are due to be announced in H1 2025. For more information, see our blog post.

Help consumers navigate their financial lives

In order to get consumers to invest more in the wider economy, it is necessary to build their trust in financial products. For the past few years, the FCA and The Pensions Regulator have been working to build a value for money framework for workplace pensions, and the FCA says it wants to allow pensions to invest in more long-term assets. The FCA has also launched a market study into the distribution of pure protection products to consumers acting in their personal capacity.

The FCA also wants to boost home ownership. It recently reminded lenders of the flexibility within the interest rate stress test rule, which may make it easier for people to access a mortgage, and it will shortly launch a call for evidence on current and alternative approaches to stress testing. It also plans to consult in May 2025 on ideas to simplify its mortgage rules and make it easier for borrowers to remortgage and discuss their options outside a regulated advice process, among other things, and it will open a public discussion in June on the future of the mortgage market. 

In addition, the FCA wants to make sure consumers have access to the right information and support. The FCA’s consultation on the introduction of “target support” for pensions closed in February 2025, and draft rules are expected in the next few months. The new Consumer Composite Investments (CCI) framework being rolled out this year will replace the PRIIPs regime and is intended to ensure that consumers get the information they need to make informed investment decisions without overwhelming them.     

Underpinning all this is the Consumer Duty, which the FCA hopes will enhance consumer confidence in financial products and services. The FCA also says it will support the government’s efforts to develop a financial inclusion strategy, and it will work with partners to address low financial capability. 

Fighting financial crime

The FCA has reiterated its commitment to addressing financial crime, with a particular focus on targeting those who exploit their regulated status as a cover for criminal activities such as fraud and market abuse. The FCA’s strategy is to use the tools as its disposal such as public warnings, formal requirements on firms, civil action and criminal prosecution, while encouraging firms to use new technologies to strengthen their anti-crime systems. 

The FCA will also share intelligence and coordinate action with domestic law enforcement and regulators as well as international counterparts, and it will look to raise consumer awareness of investment and APP fraud by increasing its alerts of potential scams and developing new ways to get them to consumers. 

An international regulator for an international market

The FCA says it will continue to advocate for global cooperation and openness, though it  recognises the challenges posed by growing competition and geopolitical instability. It may therefore choose to engage with a smaller number of like-minded jurisdictions to make progress on some issues, which could lead to market fragmentation. The FCA warns that it will face difficult choices if standards set in global agreements or through multilateral bodies are not consistently implemented throughout the world. This could be the case, for the example, if the US decides not to implement Basel 3.1 on the same basis as other countries, placing those jurisdictions at a competitive disadvantage.  

To support its bilateral relationships with its counterparts around the world, the FCA is establishing a permanent presence in the US and Asia-Pacific for the first time. This will make it easier for firms in those regions to learn more about getting authorised in the UK. 

The road to 2030

The FCA’s strategy is clearly aimed at enabling the regulator to meet its secondary growth and competitiveness objective. It is also intended to empower the financial services industry to grow the economy. The UK government has been leaning on regulators to cut red tape and free business from “the shackles of regulation.” To achieve this, the FCA wants to encourage more informed risk-taking by investors and more innovation by firms, while at the same time trying to maintain market stability and relying on the Consumer Duty to ensure that firms act in their customers’ best interests. It is a difficult balance to strike, and the road to growth is going to be a rocky one. The next five years should be an interesting journey.