Rebalancing risk and building trust: the FCA’s new five year strategy

This is only the second time the FCA has committed to a multi-year strategy. The 2022-25 strategy was published a year after the UK came out of lockdown, Nikhil Rathi was just over a year into his tenure as CEO and the FCA’s Enforcement division was under different leadership. Changes that have occurred inside and outside the FCA are reflected in the tone and objectives of this new five-year strategy. The FCA also acknowledges some of the big issues the financial services industry is currently grappling with, including: increased global instability, demographic shifts, technological change and the consequences of slow economic growth. 

The overriding message of this new strategy is that the FCA intends to “deepen trust and rebalance risk to support growth and improve lives”. The FCA is still concerned with holding bad actors and those who fall short of regulatory expectations to account, but it promises to be proportionate and predictable so that it can become a more effective and efficient regulator. This raises the question of what this new strategy means for the FCA’s approach to “assertive supervision”, a question we will examine in subsequent posts.

The FCA hopes to achieve these objectives by focusing on four priorities:

• Becoming a smarter regulator, which is more efficient and effective;
• Supporting growth;
• Helping consumers to navigate their financial lives; and
• Fighting financial crime.

From an enforcement and interventions perspective, this is likely to manifest in even greater levels of supervisory contact and scrutiny, more frequent sharing of good and poor practices, and targeted data requests. Firms’ use of technology, particularly AI, and the way in which they ensure customers receive good outcomes following the introduction of the Consumer Duty, will be particular areas of likely focus. In addition to its strategy, the FCA has outlined its next steps on streamlining its rules, reducing burdens on businesses, and improving outcomes for consumers following the introduction of the Consumer Duty.

The FCA has continued its focus on fighting financial crime. It acknowledges the significant efforts firms invest in their anti-crime systems and it commits to working with and supporting firms that it believes want to play their part in tackling financial crime. However, the FCA will continue to take action against those who fail to put in place adequate measures to prevent the proceeds of crime entering the financial system.

We expect the FCA to continue to share information and collaborate with domestic and international agencies and law enforcers wherever possible. However, it acknowledges that the way in which it does this may need to change to take account of current geopolitical instability and global competition.

We will be posting more detail on what the four priorities outlined in the FCA’s 2025-30 strategy mean for firms and their interactions with the regulator. Subscribe here to receive alerts for future posts from A&O on Investigations.