The Financial Conduct Authority (FCA) launched its 2025-2030 strategy on 25th March, outlining a roadmap to enhance its regulatory effectiveness, ease the regulatory burden on firms and support the growth of the UK financial services sector. With Nikhil Rathi’s first five-year term as CEO concluding in October 2025, this strategy sets the tone for his second and final term, assuming he is re-appointed. It also builds on the lessons learned from the FCA’s 2022-2025 strategy and aligns with ongoing regulatory reviews, such as the Consumer Duty reforms.

FCA Priorities For 2025-2030

The strategic priorities set the tone for the operational work that will be the regulatory reality for insurance firms in the next few years. Alongside the strategy, the FCA published its Feedback Statement on the review of FCA requirements following the introduction of the Consumer Duty. The FCA have grasped that piece of work as its opportunity to evidence some of the strategic changes in direction it has announced and we look at that in more detail in a separate article. For the purposes of our consideration of the FCA Strategy paper though, it is clear that the new FCA approach is already a reality.

The strategic priorities rightly cover all aspects of the markets the FCA regulates – including those it is set to assume in relation to Payments Systems – but our focus is on the impact of the strategy for insurance firms.

Smarter Regulation: Efficiency and Proportionality

At the heart of the new strategy is the FCA’s commitment to being a smarter regulator. It has announced its intention to streamline supervision and oversight, particularly for firms that demonstrate a strong culture of compliance.

Commenting on this approach, Nikhil Rathi said:

“This includes taking a less intensive approach for those firms seeking to do the right thing, significantly streamlining how it sets its supervisory priorities, and reviewing whether it can stop requiring certain data returns.”

The FCA has indicated it will make several shifts in approach that will be of particular interest to firms. These include:

• Reducing the supervisory burden: Firms that proactively demonstrate compliance and positive cultural behaviour can expect to be subject to reduced supervisory scrutiny. Key will be the way firms approach the challenge of ‘demonstrating’ this approach – we would suggest that alongside the specific regulatory actions firms can evidence, the corporate culture of the firm will play a key part. There is also a commitment to ‘retire’ outdated guidance, such as Treating Customers Fairly and withdraw supervisory publications such as Dear CEO letters, Portfolio letters, and Thematic Reviews that predate the 2022-2025 strategy.
• Streamlined priorities: The FCA aims to accelerate its response times, particularly in areas such as Thematic Reviews, which have historically taken years to implement in some cases. This could lead to quicker results in regulatory adjustments. This is broadly good news, but firms will need to ensure they are prepared for regulatory change taking effect more swiftly.
• Simplified data returns: As the FCA has become increasingly data-led, the burden on firms to provide different data sets has increased significantly. The strategy has introduced a commitment to simplify the requirements with the removal of certain data return requirements. That should ease the operational and technological regulatory burdens, hopefully leading to cost and time efficiencies for firms.

The FCA are also signalling a shift towards faster enforcement action, a response to calls for more decisive action following the withdrawal of the controversial ‘name and shame’ proposals, announced just a few weeks ago. This faster pace, seen in the quick implementation of some Consumer Duty reforms, will likely set the tone for the FCA’s future enforcement approach.

Supporting Growth and Innovation

A core focus of the strategy is on supporting growth by enabling innovation and ensuring the UK financial services sector remains competitive. This aligns with the Chancellor’s Mansion House speech (which prioritised the financial services sector to deliver growth for the UK economy) and the more recent exchange of letters between the government and the FCA on how it would adapt to help drive growth, whilst continuing to discharge its primary responsibility to protect consumers.

The FCA highlights the three distinct areas of risk it is most concerned with and how it proposes rebalancing these to help enable informed risk taking that nurtures innovation and competition. These are:

• Regulatory risk: The focus here seems to be on striking a balance that is attractive to new market entrants, without unduly compromising consumer protection. New entrants bring more competition and innovation, which help drive growth. This is backed up in the strategy with a specific commitment to streamline the authorisation process for new entrants.
• Market and firm risk: The rising use of AI is on one hand an area of concern to the FCA but is also recognised as a significant opportunity for firms to deliver enhanced efficiencies and improvements in customer service. The FCA’s role in guiding AI’s application by firms will be crucial in maintaining market integrity. AI is a key priority for the Government which has plans to make the UK a leading authority on the use of this technology. If you would like to read more about the operational and regulatory aspects of this, ICSR Operations Director Benoit Steulet explores it in more detail in ICSR Horizons. (Download your copy here.)
• Consumer risk: There is an acknowledgment that every financial decision carries inherent risks. The strategy suggests a new balance will be struck, for example, in commercial insurance markets where there was a sense that the level of regulation was overly burdensome. The FCA is clear – its objective is not to protect customers from any and every possible risk.

The FCA has aligned success on this objective very clearly with an increase in the UK’s financial services exports and it is interesting to see the related announcement that it will be expanding its international presence, with offices due to open in the US and in the Asia-Pacific region, aimed at increasing the UK’s financial services exports. The presumption is that there will be a focus both on attracting new investment into the UK from firms based in those regions and on helping create better regulatory alignment.

Helping Consumers Navigate Their Financial Lives

Having talked about the rebalancing of risk, it remains the case that the FCA’s 2025-2030 strategy places consumer protection at the forefront, with the Consumer Duty remaining a cornerstone of the regulator’s efforts.

The recent wider review of rules and regulations following the launch of the Consumer Duty is the first evidence of the new strategic approach being taken by the FCA, with a commitment to swiftly implement changes where there is strong justification and broad industry support.

There is a commitment to continue the work on fair value and competition given the very obvious consumer protections this work provides. But alongside that, the FCA has promised to ensure its rules are future-proofed and help drive innovation that benefits consumers.

The stated measures of success, from an insurance market perspective, include:

• an increase in the number of consumers holding certain key products, which it has defined as including general insurance; and
• an increase in customer satisfaction with their financial services providers.

The assumption is that it will measure these factors, at least in some part, using the Financial Lives Survey. The FCA has recently awarded new contracts for the delivery of this work through to 2031.

Firms with customers who may be within scope for the financial lives survey work may wish to invest in their own customer satisfaction measures, if they do not already do so. The output data – and evidence of senior management engagement and action – will go a long way to helping identify the firm as one demonstrably seeking to do the right thing and warranting less-intensive regulatory oversight.

Open Finance: A New Era of Accessibility?

The strategy also hints at the potential launch of ‘Open Finance,’ which could bring similar benefits to those now enjoyed by over 11 million people using Open Banking. The initial focus for Open Finance will be outside the scope of the insurance market – small business lending – but longer term it could open the door to brokers simplifying access to information about insurance products through API-style connections with providers. This could be particularly valuable for tech-focused Managing General Agents (MGAs) and the insurance market, where innovation could transform how products are distributed and information collated and disseminated to consumers. Consumers are currently faced with multiple online portals to access information about the different products they have, unless they are all provided by a single company, which is rarely the reality.

Fighting Financial Crime

Firms are viewed as a critical line of defence against criminal misuse of financial services and the FCA appears to be placing a greater onus on those firms to help it fight this battle. The strategy aims to support firms in adopting new technologies to improve their anti-crime systems while reducing associated costs. But there is a warning to firms too – the FCA will be swift in acting against those firms who fail to take the necessary steps to play their part in this process.

Conclusion

The FCA’s 2025-2030 strategy provides a clear roadmap for regulatory evolution, with a focus on making the regulator smarter, supporting innovation, and strengthening consumer protection. Firms should prepare to engage more closely with the FCA, not only by demonstrating strong compliance but also by aligning themselves with the FCA’s vision of a modern, technology-enabled regulatory framework. As the FCA’s role continues to evolve, so too must the industry’s approach to navigating the increasingly complex regulatory landscape.

Noticeable by its absence in 2025 is an annual business plan perhaps due to the pressure to deliver a new strategy in a short timeframe. In 2022 when the FCA launched its last strategy, the annual business plan outlining the specific activity it intended to take to begin the process of delivering those strategic objectives was published in tandem. The Regulatory Initiatives Grid offers little additional guidance, with the last update to that taking place in October 2024. Whilst we now have clarity on the new approach to regulation that the FCA plans to take, beyond the guidance published on the review of rules following the implementation of Consumer Duty, we have little clarity on the specific actions the FCA plan to take. That will come, but only the FCA currently knows when.

If you would like to discuss any aspect of the FCA strategy, please speak with the author or your usual ICSR contact.