Legal briefing | 28 Mar 2025 |

FCA Strategy for 2025 and Beyond

No bonfire of rules yet, but some targeted changes may be on the way

On 25 March 2025, the UK Financial Conduct Authority published a feedback statement (FS25/2) responding to its earlier call for input on reviewing FCA requirements following the introduction of the Consumer Duty in July 2024 (the Feedback Statement). On the same day, the FCA also published its high-level five-year strategy setting out its key strategic priorities until 2030 (the Strategy Document).

Although both documents provide a strategic overview of the FCA's priorities and work plan for the future, the Feedback Statement contains a more concrete list of intended FCA actions for the short to medium term, at least in relation to retail business and some related rules. Conversely, the Strategy Document is a more general exposition of FCA strategic priorities but offers less detail on the specific activities the FCA intends to undertake to achieve its identified goals.

We summarise the key points from both documents in further detail below.

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Are the Strategy Document and the Feedback Statement relevant to all firms?

In principle, the Strategy Document is relevant to all FCA-regulated firms, although in many cases, they are unlikely to find the high-level discussion of the FCA's key supervisory priorities particularly controversial or surprising.

The Feedback Statement will potentially be more interesting to many UK firms. Although the original call for input was framed primarily through the lens of identifying FCA rules that might be redundant or duplicative following the introduction of the Consumer Duty, some of the resulting proposed actions in the Feedback Statement appear to have wider potential relevance and so may also be of interest to FCA-regulated firms that are not subject to the Duty.

Nonetheless, as the Feedback Statement only provides a brief outline of the FCA's future intended activity in this area, firms will need to wait to see the detail of specific proposals in the future to assess the extent to which they may be affected in practice.

Do firms need to take any action at the moment?

There are no immediate action points for firms arising from either the FCA's Strategy Document or from the Feedback Statement. However, firms may wish to consider the content of both publications as part of their future strategic business planning and to identify whether they should engage further with the FCA (including through trade associations) on some of the proposals that the regulator intends to publish in the near future.

What are the key points raised in the Feedback Statement?

The Feedback Statement identifies a series of immediate actions and future steps that the FCA intends to undertake, having considered the issues raised by firms in response to the original call for input. These include the following:

REVIEW OF DEAR CEO LETTERS AND PORTFOLIO LETTERS

During Q2 2025, the FCA is planning to review all existing Dear CEO letters and portfolio letters that pre-date the implementation of its 2022-2025 business strategy. The FCA's general expectation is that it will withdraw these, unless it identifies that a specific publication should continue to apply.

The FCA is also planning to retire some outdated guidance later in 2025 (for example, in connection with its historical Treating Customers Fairly initiative).

CONSUMER DUTY - RETAIL DISTRIBUTION CHAINS

The FCA will consider how it can provide more certainty about the Consumer Duty obligations of firms in retail distribution chains where the firm does not directly interact with the end retail customer.

This could include further guidance on information sharing through the chain and on how the Duty applies in a proportionate way to firms with indirect roles.

REVIEW OF CASS RULES

Later in 2025, the FCA will consult on updating requirements in its Client Assets (CASS) sourcebook relating to record keeping in connection with due diligence, reconciliation rules and rules on interest owed to firms.

REVIEW OF RETAIL CUSTOMER AND SME DEFINITIONS

The FCA will review the various definitions of retail customer and small and medium-sized enterprises (SMEs) used across different sectoral rules to determine if these can be simplified and made more consistent. Depending upon the approach adopted, this could potentially affect the application of various consumer protection rules in the FCA Handbook.

REGULATORY GUIDES FOR SMALLER FIRMS

During 2025, the FCA will pilot an approach for producing guides on regulatory requirements specifically for smaller firms and will then assess whether this should be rolled out more broadly.

The FCA provides very little detail on what this would look like in practice, except to suggest that the existing FCA Financial Crime Guide is an example of the potential format the FCA is envisaging.

REVIEW OF SYSC RULES

In the longer term, the FCA will consider whether to review the existing rules in its Senior Management Arrangements, Systems and Controls (SYSC) sourcebook, presumably with a view to streamlining and simplifying the extensive content in that part of the Handbook.

AUTHORISED FUNDS - INVESTMENT AND BORROWING POWERS

The FCA will also consult later in 2025 on simplifying the rules for authorised fund managers on investment and borrowing in the FCA's Collective Investment Schemes (COLL) sourcebook.

AUTHORISED FUNDS - ANNUAL ASSESSMENT OF VALUE REPORTS

The FCA will consult later in 2025 on changes to the requirement for authorised fund managers to publish annual reports on their assessments of value.

CONSUMER CREDIT RETAIL DISCLOSURES

Alongside HM Treasury's review of the Consumer Credit Act, the FCA will review the existing financial promotion rules for consumer credit. It will look to consult within the next year on removing overly prescriptive or outdated requirements for consumer credit advertising and will discuss whether it should review annual percentage rate (APR) disclosure rules.

RETAIL BANKING DISCLOSURES

The FCA will review existing retail banking disclosure requirements with a view to increasing flexibility and allowing greater tailoring of communications for customers. This will include a review of the existing requirements on summary box information for savings accounts.

INSURANCE SECTOR PROPOSALS

The FCA will consult by summer 2025 on proposals for the insurance sector, including in areas such as providing greater flexibility around how firms review product value under existing product governance rules and removing the specific minimum hours training and development requirements for insurance employees.

APPLICATION OF FCA RULES TO NON-UK INSURANCE CUSTOMERS

The FCA will seek also views (presumably through a discussion paper) on potentially limiting the application of FCA conduct rules, including the Consumer Duty, to services provided by UK insurance firms to non-UK customers. Any proposals will, however, need to reflect agreed international obligations.

Although this work will start by looking at the insurance sector, the FCA indicates that it may then move to consider this territorial application issue more broadly (and therefore this could become relevant to other firms in the future).

MORTGAGE LENDING PROPOSALS

The FCA will continue with its review of responsible lending and mortgage advice rules. It will also publish a discussion paper in June 2025 on consumer disclosure requirements for the mortgage sector, as well as on other topics such as affordability testing, lending in later life and responsible risk-taking.

The FCA will also consult in May 2025 on proposals that are designed to make it easier for consumers to remortgage with a new lender, reduce their borrowing through term reductions, and discuss their mortgage options with a firm without triggering the formal regulated mortgage advice process.

TRAINING AND COMPETENCE RULES

The FCA will consider options for reviewing the existing Training and Competence sourcebook and competence requirements in other FCA sourcebooks. The regulator will use the insights it has gained from its review of the insurance sector to inform its approach in this area.

FCA SUMMER 2025 SUMMIT

The FCA plans to hold an in-person summit in summer 2025 to discuss the issues raised in the Feedback Statement with firms, trade bodies and consumer organisations. The summit is also expected to have representatives from other UK authorities (although the FCA does not specifically name which authorities will attend).

The FCA will report back on its progress on the work identified in the Feedback Statement in September 2025.

Although the above proposals may have areas of overlap with the Consumer Duty, in many cases, they relate to broader requirements that may extend beyond retail customers. As a result, firms that are not within scope of the Duty may still wish to consider whether any of the above points (for example, the proposals around reviewing the SYSC or CASS rules) are relevant to their operations and whether they should engage with the FCA (whether directly or through industry associations) to help shape any changes that may also affect non-retail business.

What are the key points in the Strategy Document?

In the Strategy Document, the FCA identifies the following four strategic priorities throughout the next five years, although many of these are likely to sound familiar to anybody who has read previous FCA business plans:

Being a smarter regulator by being more predictable and proportionate and improving processes, particularly through the use of technology.
Supporting growth by enabling investment and innovation and improving competitiveness, adopting a "tech-positive approach".
Helping consumers navigate their financial lives, with a particular focus on the Consumer Duty and on ensuring consumers have the necessary support and information to make informed financial decisions.
Fighting financial crime, working with law enforcement agencies to disrupt scams and supporting firms in developing new technology to improve their controls and reduce costs, while also raising awareness among consumers.

What is perhaps more novel is that the FCA sets out some broad measures for determining whether it has been successful in achieving these priorities (although these generally fall short of specifying quantitative targets). For example, the FCA states that one measure of success in connection with its "helping consumers" priority is whether a higher proportion of consumers who have more than £10,000 in investable assets are holding mainstream investments by 2030, compared with today. These success measures seem designed to provide a greater degree of transparency and accountability about whether the regulator is achieving its long-term goals (although some might argue that the stated measures are somewhat unambitious in practice).

The Strategy Document also contains a section on rebalancing risk, emphasising that financial regulation should be about "enabling informed risk to be taken" rather than "eliminating it entirely". This picks up on recent messages from the FCA about the need for a broader debate on where the regulator should strike the balance between encouraging economic growth and innovation on the one hand, and managing potential risk to consumers and to the integrity of the UK financial markets on the other. Given the current broader focus of the UK government on encouraging economic growth through targeted deregulation, this debate seems likely to be recurrent theme in UK financial services policymaking throughout the next few years. Firms may wish to put forward their own views on where the correct balance should be struck as part of any engagement with the FCA's future policy proposals.

What are the next steps?

The Feedback Statement identifies a significant number of proposals that the FCA has committed to publishing during 2025, with the first consultation and discussion papers expected during Q2 2025 and work continuing steadily thereafter.

Where firms identify areas that may be of interest to their businesses, they should consider opportunities to engage with the FCA as early as possible, as it may be easier to influence the development of future rules while the relevant proposals are still in an initial formative stage.

If you would like to discuss any of the points above or how they might be relevant to your organisation, please get in touch with your usual Travers Smith contact or any of the individuals named below.

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