FCA 5-year strategy: balancing growth and consumer protection
The FCA published its 5-year strategy this morning, which aligns closely with recent messaging around how the regulator will support the Treasury’s growth agenda. The strategy sets out four core priorities: supporting growth, fighting crime, helping consumers, and becoming a smarter regulator.
Compared to previous strategies—where the focus was heavily weighted toward consumer protection—this version strikes a more balanced tone. There is a clearer emphasis on the FCA’s role in promoting growth and competition, alongside its duty to protect consumers.
How this strategy filters down into day-to-day regulation and supervision of firms will be important. As a firm of industry experts, we can anticipate the practical application of the 5-year plan to give you a head start. Our clients recognise the value in proactive compliance and are engaging with us to preempt the implementation of the FCA’s strategy - get in touch to see how we can support you.
A few key takeaways
Data is key: As firms increasingly harness the power of AI, the FCA is adopting a similar approach. This greater use of technology places data integrity and management at the forefront of regulation. Firms must ensure they understand, manage, and govern their data effectively—not only to demonstrate compliance, but because data will increasingly influence regulatory decisions. Being fluent in data management and analysis will be essential as we move forward.
Evolving approach to supervision: A less intensive approach to supervision doesn’t mean a reduced regulatory burden. In our view, this signals a shift in emphasis—placing greater responsibility on Firms to get it right and consistently do the right thing. or those that fail to meet expectations, supervision teams are likely to act with greater pace and take swifter enforcement action.
Consumer Duty remains central: It’s not going anywhere and is now being positioned as a tool to support growth, not just compliance.
Financial crime continues to be a key priority: but there’s much more focus on stopping individuals who misuse FCA authorisation to commit fraud or market abuse. There’s also greater emphasis on fraud; in particular, on educating the public about investment scams and APP fraud through alerts and awareness campaigns.
Market entry and innovation: There are planned changes to simplify the authorisation process and market gateway, presenting opportunities for firms looking to enter or expand. This will be welcome news to firms that have struggled with authorisation delays and repeated information requests over the past year. It will be interesting to see whether this leads to an improvement in the number of successful authorisations—particularly in the payments space, where a high percentage of firms are still being asked to withdraw from the process.
Financial lives – with a key interest in financial inclusion: remains high on the agenda. Having seen a number of firms who have historically served those with lower financial capacity exit the market, it will be interesting to see how the FCA balances reducing mortgage access requirements with the burden of controls in the wider credit market.
Total silence on sustainable finance: It is surprising that the strategy is silent on sustainable finance, despite the ongoing implementation of the Sustainability Disclosure Requirements (SDR), the anticipated mandating of transition plans, and the expected adoption of ISSB reporting for UK firms. Given the UK government's commitment to financing the green transition, this omission leaves firms without the regulatory clarity and certainty needed to align their strategies with future expectations. The lack of direction risks undermining market confidence at a time when firms are making long-term investment decisions to support the transition to a net-zero economy.