Q&A: Impact of the UK FCA’s five-year plan
July 2025 | SPECIAL REPORT: FINANCIAL SERVICES
Financier Worldwide Magazine
July 2025 Issue
FW discusses the impact of the UK FCA’s five-year plan with Richard Barnwell at BDO London.
FW: What are the key drivers behind the UK Financial Conduct Authority’s (FCA) new five-year strategy? How does this new approach differ from previous strategies?
Barnwell: The Financial Conduct Authority (FCA) published its new five-year strategy on 25 March 2025. In some ways it is a continuation of the previous five years in that it seeks to achieve both internal transformation of its operations and improve the standard of consumer outcomes with the implementation of its flagship consumer policy initiative: the Consumer Duty. This is its first strategy with a five-year horizon underpinned by a more detailed annual plan. A longer-term strategic view enables regulated firms to have greater certainty about regulatory focus. This strategy has a greater emphasis on growth and competitiveness than in previous years.
FW: What are the main priorities outlined in the FCA’s new strategy? How will these priorities change the way the regulator supervises the financial services (FS) market?
Barnwell: There are four priority areas outlined by the FCA. First, continuing to improve its effectiveness and efficiency through use of technology. This transforms how the FCA supervises through use of data and rapid decision making. Second, supporting sustained economic growth, the FCA’s new competitiveness objective is focused on supporting innovation through its artificial intelligence (AI) lab, sandbox and open finance initiatives. Third, helping consumers navigate their financial lives, which is a continuation of the work to improve consumer outcomes through looking at how firms support consumer decision making. And fourth, a three-pronged approach to fighting financial crime by slowing the growth in fraud, protecting markets from abuse and addressing money laundering.
FW: Besides the opportunities, what potential challenges and obstacles might FS companies face due to the FCA’s new approach?
Barnwell: Firms can expect the FCA to be robust in its supervision and enforcement actions where it sees standards not being met. The FCA’s last annual report – published in September 2024 – highlighted skilled persons reviews are increasing, with over 80 percent applied to smaller firms supervised on a portfolio basis. Proportionality does not mean lessening standards. All firms, but particularly those that have not had regular supervisory contact, need to be aware that the FCA’s new data-led approach means more scrutiny, as the FCA uses data to spot outlier firms. For firms that get it right, the FCA promises a more flexible approach with less intensive supervision.
“It is an optimistic and ambitious strategy that, in part, relies on the FCA’s own ability to leverage data and technology quickly.”
FW: What advice would you offer to FS companies on responding to the FCA’s increased governance thresholds? How should companies go about reassessing their risk frameworks?
Barnwell: Firms should review whether risk and control frameworks are adequate for their size, business objectives and consumer profile, plus exposure to financial crime risks. Data about control effectiveness can help firms spot controls that are not working as expected. Checking there are clear responsibilities between first and second lines, as well as the adequate resources for the scale of business, can provide effective assurance that risk and governance frameworks remain fit for purpose. Using technology to support real-time risk management, scenario analysis and real-time risk reporting can help to drive forward looking risk management and control systems.
FW: To what extent does the FCA need to invest in technology, personnel and systems to support its new five-year plan?
Barnwell: The FCA reviews over 100,000 supervisory cases a year and deals with thousands of regulatory transactions and reporting data. It is promising to digitalise its authorisations capabilities, which should improve timescales and consistency, but is a significant investment. Its biggest recruitment drivers have been in its supervisory and data functions. It aims to invest in digital skills training for its existing staff. Parts of the strategy rely heavily on working closely with other agencies to achieve strategic aims, which could limit its ability to deliver depending on other agency capabilities.
FW: What outcomes and metrics should be used to measure the success of the FCA’s five-year plan?
Barnwell: The strategy sets out a series of outcomes for each of its four new priorities. These include metrics about meeting its own service level agreements for processing times. The most recently published performance metrics shows its 16 operating service metrics score 13 green and three amber. The FCA should now look to see if these service levels can be tightened to demonstrate greater efficiencies. Outcomes measures about trust can be trickier to measure as they rely on multiple factors. But these are the metrics that will really demonstrate whether the FCA is making a difference to the financial lives of UK citizens.
FW: Looking ahead, what additional changes might be necessary? How confident are you that the FCA’s new approach will enhance trust, balance risk, support growth and improve lives?
Barnwell: The FCA identifies some challenges that may get in the way of its strategy. These include external factors such as global uncertainty and geopolitical risks. The rapid development of AI can be both an opportunity and a threat. Historically, the challenge for the FCA and its predecessor, the Financial Services Authority, has been events foreseen or unforeseen that swallow up resources in a crisis. It is an optimistic and ambitious strategy that, in part, relies on the FCA’s own ability to leverage data and technology quickly.
Richard Barnwell is a partner within BDO London’s financial services advisory practice. He has over 25 years’ experience of working with firms across the financial services sector on a wide range of regulatory and compliance matters. He can be contacted on +44 (0)20 7893 3292 or by email: richard.barnwell@bdo.co.uk.
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