In our latest webinar for FCA-authorised firms, we examined the UK regulator’s recently released five-year strategy, providing an expert view of what this new approach means for regulation in 2025 and beyond. We also covered the latest policy updates firms need to be aware of. Here are the key takeaways.
The FCA commits to streamlining regulation
The publication of the strategy in March 2025 marks a step change in the way the regulator communicates its long-term vision, departing from its usual three-year plan. While it doesn’t reveal much about the FCA’s planned work programme, it does provide insight into its renewed approach, with a focus on growth and efficiency.
The FCA made it clear it wants to reduce unnecessarily burden for firms, with less intensive supervision, more targeted initiatives, and the removal of redundant regulatory requirements, particularly in the commercial insurance and asset management sectors. Other new changes include embracing technology to act faster when harm is identified, and working closely with regulators in ‘like-minded jurisdictions’ to support international standards. You can read a full breakdown of the 2025 – 2030 strategy here.
So, what does the new strategy mean for your firm?
We expect firms to benefit from a more digital, streamlined experience when interacting with the FCA this year. Based on the priorities it set out in its recently published work programme for 2025/2026, it’s likely it will take a more proportionate approach with regards data collection, focusing only on the data it needs to collect and removing the following regular returns:
- Form G: The Retail Investment Adviser Complaints Notifications Form
- FSA039: Client Money and Assets
- Section F RMAR
A reshaped regulatory framework for AIFMs
Another important recent publication from the FCA is the Call for Input on the future regulation of alternative investment fund managers (AIFMs). This seeks to simplify the regulation of AIFMs by eliminating the fixed thresholds that mandate that firms managing assets above one-hundred million (or five-hundred million, for unleveraged firms) be subject to the full scope of the Alternative Investment Fund Managers Directive (AIFMD) requirements. Instead, it plans to introduce a three-tier system based on the size and risk profiles of firms. This should provide greater flexibility for small and medium-sized managers, encouraging growth and innovation.
Recent consultations to have on your radar
In addition to the above call for input, recent consultation papers have focused on improving the product information framework for Consumer Composite Investments (CCIs),
- Product information framework for CCIs: CP24/30 and CP 25/9 aim to enhance transparency and consumer understanding, whilst giving firms more flexibility in how they communicate product information. It will apply to any firm that manufactures or distributes CCIs. The latest consultation proposes amendments to the transaction cost methodology and includes consequential changes to Handbook materials.
- The MiFID Organisational Regulation: CP24/24 included proposals to transfer MiFID requirements into the FCA handbook. While the impact will likely be minimal, internal compliance policy documentation and external client facing documents will need updating
FCA focus on market abuse
While the regulator has suggested it wants to streamline compliance requirements, market abuse is still a big focus and is necessary to maintain market integrity. Firms should consider assessing market abuse controls and surveillance in high- risk areas such as insider dealing prevention, suspicious client behaviour and information leaks.
In addition, firms need to be prepared to offboard clients that pose undue market abuse risk.
Three elements of an adaptive compliance framework
The regulatory landscape is ever-evolving, so having a compliance framework that can adapt quickly is a must. An adaptive compliance framework is:
- Enabled by technology: policy updates and compliance processes should be supported by automation to ensure you’re continually up-to-date and able to assess live risks.
- Underpinned by a culture of openness and learning: a strong culture encourages accountability, early reporting and the quick resolution of issues – before they negatively impact your clients.
- Assured by independent health checks: health checks involve a review of a firm’s compliance program to identify strengths and weaknesses and provide recommendations for improvements. Conducting these regularly allows to uncover risks as early as possible.
Don’t miss out on more in-depth analysis. Watch on the full webinar on-demand here.