As we begin another year, it is always interesting to reflect on what the FCA has focussed on in the past 12 months and to make some predictions for the future. Peering into the FCA’s strategic horizon for this year—and what it means for FS regulatory lawyers—a number of dominant forces shape the landscape.
What has been on the agenda for 2025?
We have seen a significant number of consultations coming from the FCA in 2025 (including a flurry of papers at year end) arising from the FCA’s four overarching priorities for 2025 to 2030 which were enshrined in its Business Plan for the period.
Each of these priorities, reflected in the FCA’s regulatory activity over the past year, is considered below.
A smarter regulator
The FCA intends to become more predictable, purposeful, and proportionate, reducing unnecessary regulatory burden and digitising processes. This priority may not be immediately obvious to regulated firms and their legal counsel although we have seen many consultations this year focussing on reducing the regulatory burden (for example, in relation to SMCR, mortgage related rules and more recently transaction reporting). The FCA has streamlined data collection and reporting requirements and has enhanced the “My FCA Portal.” It is also understood that the FCA is leveraging technology and AI internally to enhance its authorisation process and make supervision and enforcement action more streamlined.
Supporting growth
Following a request from Government in December 2024 to “Regulate for Growth” the FCA has taken active steps to move towards “principles-based, outcomes-focused regulation”, which is a shift away from the granular detail we have seen coming out of the regulator in past years. We have seen a simplification of the UK Prospectus Regime and the launch of PISCES (the Private Intermittent Securities and Capital Exchange System) as well as an expansion of regulatory sandboxes for fintech firms. Another area that looks to support growth is the recent set of consultations and discussion papers about regulating qualifying crypto-assets and stablecoins (bringing these inside our traditional FSMA framework). In December 2025, the FCA wrote to the Prime Minister confirming that it had delivered on almost 50 pro-growth measures, for example the new consumer composite investments regime and changes to customer categorisation.
Helping consumers
Supporting consumers is a key regulatory initiative with the Consumer Duty as the centrepiece. The FCA has made the point that it is now looking to firms to demonstrate evidence of delivering good outcomes for retail customers. We have seen ongoing thematic reviews relating to the Consumer Duty on fair value, vulnerability and clarity in communications. HM Treasury has also very recently published a financial inclusion strategy around influencing product design for accessibility and mental health considerations. Further, we’ve had FCA consultations on addressing the advice gap alongside a new regulatory framework for Buy Now Pay Later products rolling out shortly. It remains the case that the FCA really does expect firms with retail customers to put these at the heart of their business; for firms who deal with consumers, this is only the beginning.
Fighting financial crime
Financial crime remains a top enforcement priority, with recent high-profile fines for systemic AML failures at a series of Challenger banks. The FCA’s message is that it expects gold-standard compliance with the UK money-laundering regime; decisions which expose a firm to money-laundering risk may be met with substantial fines (in the tens of millions). The FCA has also made clear with the implementation of the UK failure to prevent fraud offence that it expects regulated firms to embed fraud protection into their financial crime framework.
What can we expect to see in 2026?
Here are our predictions for the New Year from an FS regulatory perspective.
Looking ahead to the year to come, we expect a number of key regulatory developments and areas of focus to shape the FCA’s approach.
The FCA will continue to simplify regulation and reduce administrative burdens for firms, following its principles-based and outcomes-focussed approach. Alongside this, the Consumer Duty will remain a key initiative, with firms focusing on embedding the Duty within their organisations and demonstrating evidence of good outcomes. Further thematic reviews are expected in 2026 and we may see some more enforcement around Consumer Duty this year.
Continuing on from the above, what is emerging is a push and pull between deregulation and enhanced consumer protection. While the Consumer Duty is certainly principles-based and outcomes-focused, it places a huge regulatory burden on firms with retail customers or those in the distribution chain.
The FCA looks to be moving forward at pace with supporting Government to bring crypto-assets and stablecoins within the FSMA / RAO framework. The crypto roadmap suggests a 2026 implementation date.
AI becoming mainstream has been one of the key subjects of 2025 and it will be interesting to see how the FCA adapts to AI in the year to come. The FCA has recently said it wants firms to test and collaborate around AI, rather than introducing formal rules (and any that are eventually introduced will be outcomes-focussed). The FCA is now working with firms to test AI in a safe place through the AI Live Testing initiative (for example to monitor complaints and treatment of vulnerable customers). It is likely that the FCA will make use of AI to streamline and speed up authorisation, enforcement and supervision matters.
We have seen the FCA build relationships with the US, Switzerland and Singapore this year and we expect to see more international partnerships next year (the FCA hints at this in its letter to the PM).
We think there is likely to be a trend around greater and earlier supervisory intervention, with the supervision team getting involved before harm escalates. Enforcement will be more targeted; there will be fewer cases but these will be higher impact with strong deterrence through large fines. Financial crime will continue to be a significant area of focus for the enforcement team. We understand that the FCA has relied heavily on whistleblowers this year, with a significant number of cases leading to enforcement action. We can see the FCA encouraging firms to put in place robust whistleblowing frameworks as they view this as a critical intelligence source. The guidance on non-financial misconduct comes into force from September 2026 and we may well see enhanced enforcement action from the FCA around this area.
Perimeter reform is also expected to be an area of focus. There are a number of areas in the FCA’s sights for reform, such as the Consumer Credit Act (the FCA specifically calls this out as an area in need of urgent reform in its letter to the PM).
In its letter to the PM, the FCA set out what it intends to focus on in 2026, including reforming rules for venture capital and alternative investment fund managers, finalisation of digital asset rules, a further overhaul of mortgage rules, and getting ready to enable some early-stage firms to conduct regulated business before full authorisation.
While details remain to be seen, this could be significant.
Finally, as the new anti-money laundering supervisor for professional services, the regulator urged the PM to introduce digital ID quickly as it could streamline know-your-customer requirements. This raises the question of whether this could signal a potential change to the MLRs once digital ID is introduced in the UK.
As we peer into the FCA crystal ball, 2026 looks set for growth, guided by principles and powered by tech, with a hefty reading list for FS regulatory lawyers and their clients. The message from the crystal ball? Change, change and more change, all in the spirit of growth.
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