The United Kingdom Financial Conduct Authority (FCA) plans to eliminate unnecessary regulations, reduce reporting requirements, introduce digital service standards, and simplify industry rules to support the U.K. government’s growth objectives.
These proposals add to the FCA’s planned 2025 reforms, according to a letter from Chief Executive Nikhil Rathi to U.K. leadership, including Prime Minister Keir Starmer.
The FCA has already indicated plans to simplify commercial insurance rules, aiming to balance competitiveness with policyholder protections.
For insurers, the FCA intends to ease conduct requirements for wholesale insurers, cut unnecessary regulations, and revise its handbook based on industry feedback. Reporting requirements will also be reduced for companies working with the Bank of England and the Prudential Regulation Authority, which oversees insurance carriers.
Additionally, the FCA will eliminate the consumer duty board champion role, which was created to advocate for consumers under stricter protections.
Rathi stated the role is no longer necessary since the consumer duty framework has been fully implemented. Instead of adding new rules, the FCA will assess whether the existing framework sufficiently protects consumers when considering future regulations.
The agency also plans to introduce digital service standards, including requiring insurers to accept electronic verification of death to expedite bereavement claims.
To improve efficiency, the FCA aims to accelerate the authorization process for new companies by expanding digitization, which should lower costs and shorten approval timelines. Each supervised firm will be assigned a dedicated case manager, and the FCA will increase its early-stage support for high-growth companies by 50%, adding more supervisors.
Innovative startups sometimes struggle to meet all threshold conditions immediately and fail to gain approval. We want to collaborate with the treasury to create a legislative framework that allows relevant firms to engage in limited regulated activities under streamlined conditions.
The FCA is implementing significant reforms to wholesale markets, including a new prospectus regime, expanded retail access to corporate bonds, and a private market for non-listed companies. Additionally, it will ease conduct requirements for wholesale insurers, streamline asset management regulations, and improve access to fixed-income data through a consolidated tape. To enhance liquidity, the FCA will accelerate the review of capital requirements for specialized trading firms.
Accelerating Digital Innovation
The FCA plans to strengthen the U.K.’s financial services digital infrastructure in alignment with the government’s AI strategy. It will introduce a new Executive Director for Payments and Digital Finance, responsible for leading digital advancements. Key initiatives include:
- Advancing a digital securities sandbox.
- Improving credit information governance.
- Reforming online pension tools and dashboards.
- Maintaining a regulatory approach that avoids new AI-specific rules.
By 2025, the FCA aims to introduce open banking payments to increase competition and leverage data access laws to develop open finance, particularly for SME lending. Potential additional reforms include lifting the £100 contactless payment limit and setting new digital service standards, such as requiring electronic death verification for bereavement claims.
Reducing the Regulatory Burden
The FCA is working to remove unnecessary regulations and streamline reporting requirements. Planned 2025 initiatives include:
- Simplifying its handbook based on industry feedback.
- Reducing reporting burdens in collaboration with the Bank of England and the Prudential Regulation Authority (PRA).
- Increasing flexibility in the Senior Managers and Certification Regime.
Further measures include eliminating the Consumer Duty Board Champion role, assessing the sufficiency of existing consumer protection rules before introducing new ones, and reviewing mortgage lending rules to balance access and risk. The FCA also proposes reducing anti-money laundering costs by relaxing Know Your Customer (KYC) requirements for small transactions.
Supporting Startups and High-Growth Firms
To accelerate new business authorization, the FCA will digitize processes, reduce costs, and expedite timelines. Each firm in the regulatory sandbox will receive a dedicated case officer, and the FCA will expand pre-application support for wholesale, payments, and crypto firms. It also aims to introduce a framework that allows startups to conduct limited regulated activities under streamlined conditions.
Enhancing Global Engagement
The FCA will increase international engagement to attract investment and improve exports. It plans to establish a U.S. presence and expand further into Asia.
Regulatory Certainty and Risk Management
The FCA recognizes that certainty is essential for market confidence. It aims to prevent large-scale consumer redress exercises through proactive regulation and coordination with the Financial Ombudsman Service. Rathi stressed the need for a shared acceptance of regulatory risk across government and Parliament to support informed decision-making.