With a clear commitment from the regulators to support growth, firms may be wondering what this means for their current regulatory relationship and the wider implications for their supervisory interactions.
Contrary to the idea that firms can expect a more relaxed stance from the regulators, our analysis of recent portfolio letters and data on supervision reveals an evolving landscape with heightened regulatory risk for firms. In particular, it is clear that both regulators are taking a significantly more assertive approach to supervisory action, which often yields swift and impactful consequences for firms.
A stacked supervisory agenda
Despite the regulators’ growth-focused commitments, firms should remain vigilant about the regulators’ extensive supervisory agenda. Recent portfolio letters published in December 2024 and January 2025 by the FCA and PRA highlight that in-scope firms can expect thematic reviews, in depth assessments on key issues, and ongoing firm engagement. Across the suite of portfolio letters, both regulators assure firms that they are prepared to use their supervisory tools to intervene when necessary.
These are not empty threats. One notable example is the FCA’s 2023 portfolio letter to wholesale brokers, where the FCA warns that it will consider its use of supervisory tools where material weaknesses are identified, including in relation to financial resilience. The most recent portfolio letter (2025) reveals that this came to fruition, as the FCA required CEO attestations to confirm successful remediation of liquidity risk management frameworks. In this letter, the FCA continues to emphasise its commitment to using a range of supervisory tools to intervene across a range of issues, including placing business restrictions on firms and taking enforcement action where necessary.
The emphasis on assertive supervision applies across the financial services sector. Recent PRA and FCA letters to UK deposit takers, international banks, custody fund services, CFD providers, and benchmark administrators contain a similar commitment to the use of supervisory tools, and an emphasis that firms must act on areas where weaknesses are still identified despite previous regulatory engagement.
A more assertive stance
Recent data confirms that the FCA is continuing to significantly re-position its approach to supervision, adopting a more assertive and interventionist stance. There continues to be a clear increase in the use of supervisory tools such as voluntary and own-initiative requirements, attestations by senior managers, and skilled person reviews.
The data indicates a clear trend of increased use of supervisory and intervention tools. Voluntary requirements (VREQs) are the most common form of intervention used by the FCA, with the number of VREQs agreed between the FCA and firms surging by 486% over the past 4 years. The use of skilled person reviews has also increased by 124% over the past three years, and have predominantly focused on retail banking, lending, and investment services, reflecting the FCA's ongoing commitment to tackling consumer harm. Common topics for these reviews include controls and risk management, financial crime, and conduct of business.
Attestations are another key component of the FCA's accountability toolkit, requiring a named senior individual at an authorized firm to personally attest that the firm will take or has taken specific actions required by the regulator. The number of attestations requested by the FCA has been steadily increasing, with an 85% rise between 2022/23 and 2023/24.
Firms should not underestimate the significance of these regulatory tools, which are not only employed to intervene swiftly and effectively but also to gather critical information about firms, often serving as a precursor to formal enforcement investigations.
Data-led supervisory activities
Proactive data-led information requirements are increasingly forming a crucial part of the FCA’s more assertive strategy. The FCA has invested significantly in its data teams, with staffing in the Data Technology and Innovation team increasing by approximately 31% between 2022/23 and 2023/24. Since the end of 2023, the FCA has used targeted data requests to delve deeper into areas where it perceives an increased risk of harm. These areas include non-financial misconduct, general insurance value, provision of banking services, de-banking, treatment of politically exposed persons, and ongoing advice charges.
Firms should prioritise and carefully consider their response to these data requests, as they may prompt the FCA to use its early intervention powers or commission a skilled person review, particularly where there are concerns about the quality or timeliness of the data provided.
What to expect next?
Both the PRA and FCA have indicated support for the government’s growth agenda as an important step towards fostering economic expansion, but in a recent speech Therese Chambers gave an important insight into how regulators seek to square this commitment with their broader remit:
“For the UK financial services industry to grow and be competitive, investors and institutions need to have trust in it. And how can we expect them to have that trust, if they don’t see system integrity?”
Firms must therefore remain aware of the regulators’ continued commitment to early intervention in order to prevent harm, and the increasing use of a wide range of supervisory tools and data-led supervision. In this increasingly complex regulatory landscape, firms must prioritise proactive and productive regulatory relationships, coupled with a top-level focus on risk management and compliance, in order to mitigate the risk of becoming subject to the regulator’s interventionist approach.
You can review our detailed analysis of the current themes and trends in regulatory enforcement and intervention in UK financial services in our feature article: New UK regulatory landscape: enforcement and supervision shift.
