The FCA’s New 5-Year Strategy: A Shift Towards Supporting Growth and Consumer Wellbeing
In a significant move, the Financial Conduct Authority (FCA) has unveiled a new five-year strategy, marking a profound shift in its regulatory approach. This strategy, announced on 25 March 2025, is a direct response to the UK government’s emphasis on promoting economic growth and competitiveness.
Here is how this new strategy is set to impact both businesses and consumers, and what it means for the future of financial regulation in the UK.
Supporting Sustained Economic Growth
At the heart of the FCA’s new strategy is a strong focus on supporting economic growth. This aligns with the government’s pro-growth agenda, as highlighted by various requests from the Prime Minister and Parliament to regulators to balance risk management with growth promotion.
The FCA has clearly taken this message on board, aiming to create an environment that fosters innovation and competitiveness while ensuring consumer protection.
Being a Smarter Regulator
The FCA is committed to becoming a predictable, purposeful, and proportionate regulator. This involves adopting a more flexible approach to supervision, particularly for firms that demonstrate a genuine commitment to compliance.
For such firms, the FCA plans to implement a light-touch regime, reducing the intensity of supervision and fostering a more collaborative relationship. This approach is designed to encourage transparency and trust between regulators and regulated entities.
Enhancing Efficiency and Effectiveness
To achieve its goals, the FCA will leverage technology and improve its processes to become more efficient and effective. This includes streamlining its supervisory priorities, publishing fewer but more focused market reports annually, and providing more direct contact points for regulated firms.
The FCA also aims to share more insights from its supervisory work, ensuring that firms have the guidance they need to operate within the regulatory framework.
Fighting Financial Crime
Financial crime remains a significant threat to the stability of the financial system, and the FCA is steadfast in its commitment to combat it. The new strategy reinforces the FCA’s determination to fight financial crime, ensuring that the UK’s financial markets remain safe and secure for all participants.
This includes streamlining the enforcement portfolio to achieve quicker outcomes without compromising on the quality of enforcement actions.
Deepening Trust and Rebalancing Risk
The FCA’s strategy is built around four key priorities: deepening trust, rebalancing risk, supporting growth, and improving lives.
By rebalancing risk, the FCA aims to strike a better equilibrium between protecting consumers and allowing businesses to innovate and grow. This approach recognises that excessive regulation can stifle growth, while inadequate regulation can lead to consumer harm.
The FCA is thus moving from a sole focus on preventing consumer harm to a more holistic approach of helping consumers make informed financial decisions.
Impact on Firms
For firms regulated by the FCA, this new strategy brings both opportunities and challenges. On the one hand, firms that demonstrate good compliance practices can expect a more flexible and less intensive supervisory approach.
This could lead to reduced regulatory burdens and more direct access to the FCA, facilitating better communication and cooperation.
On the other hand, firms must be prepared to adapt to the FCA’s more streamlined and efficient regulatory processes, ensuring they remain compliant with the evolving regulatory landscape.
Conclusion
The FCA’s new five-year strategy marks a significant evolution in financial regulation in the UK. By focusing on supporting growth, being a smarter regulator, and helping consumers make better financial decisions, the FCA is aligning itself with the government’s broader economic goals.
As accountants at Cutts and Co, we recognise the importance of this shift and are committed to helping our clients navigate these changes, ensuring they remain compliant and thrive in this new regulatory environment.
In the coming years, it will be crucial to monitor how this strategy unfolds and its practical implications for businesses and consumers.
With the government set to publish its FS Growth and Competitiveness strategy later this year, the regulatory landscape is poised for further evolution.
At Cutts and Co, we are dedicated to providing our clients with the expert guidance and support they need to succeed in this dynamic environment.
