Regulatory Year in Review 2025

Over the past year, UK financial services regulation has increasingly focused on promoting economic growth, reducing unnecessary regulatory burden and upholding strong standards in financial crime, market integrity and governance.

Objectivus is well placed to provide context and support to firms seeking to understand how these developments affect their regulatory obligations.

 

In this review we cover:

• The FCA’s five year strategy and growth agenda
• Rachel Reeves’ Mansion House speech
• Reducing regulatory burden and data reporting reform
• Financial crime, market abuse and enforcement priorities
• Structural regulatory reform and consolidation
• Innovation, capital markets reform and digital finance
• Changes to the UK-China Financial Relationship
• FCA emphasises governance and culture through ‘doing the right thing’

 

 

The FCA’s Five Year Strategy and Growth Agenda

The FCA outlined its five year plan which was focused on driving economic growth, improving consumer outcomes and becoming a smarter, more agile regulator.

At the heart of the strategy are four core priorities:

• Smarter regulation – embracing technology and streamlining processes to be more efficient, predictable and proportionate
• Supporting sustained economic growth – enabling innovation and investment to maintain the UK’s global leadership in financial services
• Helping consumers navigate financial lives – improving access to information, boosting trust and supporting better financial decisions
• Fighting financial crime –strengthening firms’ ability to act as a first line of defence

This strategy underpinned many of the regulatory changes seen throughout the year, including reforms to listing rules and prospectuses, simplification of the rulebook and a renewed emphasis on predictability and proportionality. The FCA also acknowledged concerns about the pace of regulatory change and signalled an intention for fewer large scale changes in its upcoming five year strategy.

 

Rachel Reeves’ Mansion House speech

Chancellor Rachel Reeves delivered the Mansion House speech in July, unveiling the government’s new Financial Services Growth and Competitiveness Strategy, also known as the ‘Leeds Reforms’. This package focuses on modernising UK financial services regulation to better support economic growth. Key proposals include

• A review and potential easing of the Senior Managers and Certification Regime (SMCR)
• Revisiting ring-fencing requirements on banks to unlock capital, and encouraging long-term investing by permitting long-term asset funds within stocks and shares ISAs from April 2026
• Mortgage market adjustments to boost housing affordability
• The reforms also aim to boost housing affordability through. This strategy marks a significant shift towards growth and innovation regulation

These reforms could signal lighter compliance obligations under SMCR, new product opportunities through long-term asset funds in ISAs, and a more flexible regulatory framework supporting growth and innovation. Compliance teams should monitor forthcoming consultations closely to prepare for changes and adapt governance frameworks accordingly.

 

 

Reducing Regulatory Burden and Data Reporting Reform

In addition to the above, the FCA’s commitment to reducing unnecessary regulatory burden included the simplification of data collection. Over the course of the year, the regulator removed or streamlined many regulatory returns affecting their membership. Key changes included

• The removal of outdated and duplicative data collections
• Simplified complaints data reporting
• Reduced reporting frequency for selected RMAR sections
• The removal of nil returns under SMCR

The FCA also proposed the removal of further regulatory returns no longer needed and confirmed that it will continue to review additional data requirements.

Jessica Rusu (Chief Data, Intelligence and Information Officer) noted that the FCA is ‘focusing only on essential information’, saving time and money for firms while maintaining effective oversight. These measures form part of the FCA’s wider Transforming Data Collection programme and its commitment to “smarter regulation”.

 

 

Financial Crime, Market Integrity and Enforcement

Despite its pro-growth agenda, the FCA remained clear throughout 2025 that financial crime, market abuse and market integrity remain core regulatory priorities.

The FCA highlighted ongoing weaknesses in anti money laundering systems and controls, transaction monitoring and governance. Enforcement action during the year included fines against

• Barclays of £42 million
• Monzo of £21 million
• The London Metal Exchange of £9.2 million
• Sigma Broking £1 million

Thus, reinforced the regulator’s expectation that firms of all sizes maintain effective systems and controls, particularly during periods of growth or market stress.

The FCA also raised concerns over leaks of inside information, warning that a culture of strategic leaking may be taking hold and stressing that unlawful disclosure undermines market integrity. Updated guidance on politically exposed persons reinforced the expectation that firms should apply a proportionate and risk-based approach, avoid automatic application of enhanced due diligence and ensure decisions are clearly documented.

Across many speeches and publications, the FCA emphasised that firms are expected to demonstrate strong governance, effective escalation and accountability from senior leadership, with culture continuing to play a critical role in influencing conduct and decision making.

 

 

Structural Regulatory Reform and Consolidation

One of the most significant structural developments in 2025 was the announcement in May that the Payment Systems Regulator will be abolished, with its responsibilities primarily consolidated into the FCA. This move aims to reduce regulatory burdens, streamline oversight and eliminate the need for firms to engage with multiple regulators.

Part of the Government’s broader Plan for Change, the reform is designed to boost economic growth, encourage innovation and cut red tape. While the PSR’s statutory powers remain for now, legislation will be introduced to formalise the changes, with the FCA and PSR coordinating to ensure a smooth transition.

This announcement aligns with HM Treasury’s policy direction set out in ‘a new approach to ensure regulators and regulation support growth’, including the commitment to cut administrative costs for business by 25% by the end of the Parliament.

 

 

Innovation, Capital Markets and Digital Finance

2025 also saw significant regulatory focus on innovation and the modernisation of UK financial markets. The FCA confirmed the launch of the Private Intermittent Securities and Capital Exchange System (PISCES), a new regulated private market facilitating secondary trading in shares of growth companies, with access limited to institutional and high net worth investors.

The FCA also announced the Supercharged AI Sandbox, developed with NVIDIA, providing firms with access to enhanced datasets, accelerated computing and regulatory support to test AI-driven concepts in a safe environment. This builds on the FCA’s existing AI Lab services and reflects the regulator’s focus on emerging technologies.

Further developments included consultations on fund tokenisation, the application of existing regulatory requirements to crypto asset firms and the expansion of Open Banking toward Open Finance. These initiatives reflect the FCA’s intention to support innovation and capital formation while maintaining proportionate investor protections and strong market integrity standards.

 

Changes to the UK-China Financial Relationship

A recent speech delivered by Ashley Alder, FCA chair, shows that the regulator is focused on strengthening its financial relationship with China through collaboration in areas like green finance, wealth management, and regulatory alignment.

Shifts in demographic and evolving market needs have resulted in shared challenges and opportunities with the need for deeper co-operation, according to the speech. Key initiatives will include revitalising Stock Connect, exploring Wealth Connect, and aligning sustainability standards. A proposed Memorandum of Understanding aims to enhance data-sharing. Despite geopolitical uncertainty, the FCA remains hopeful that China will be willing to commit to openness and cooperation.

 

FCA emphasises governance and culture through “doing the right thing”

The FCA used their speeches throughout 2025 to reiterate its commitment to fostering strong governance and ethical cultures across the financial services industry. The regulator highlighted that firms are expected not only to meet minimum regulatory standards but to demonstrate proactive governance, effective escalation processes and accountability from senior leadership. It also noted that firms showing openness and early remediation may see more favourable regulatory outcomes.

Firms should ensure their governance, conduct and escalation frameworks reflect this cultural approach. Keeping a tone from the top and clear accountability with remediation will be important in staying in line with the FCA’s expectations from firms.

 

 

Key Takeaways

2025 saw a recalibration of regulation rather than deregulation. Firms benefited from reduced reporting burdens, simplified rules and clearer supervisory expectations, while remaining firmly accountable for financial crime controls, governance and culture.

Firms should continue to monitor consultation outcomes closely, review governance and accountability frameworks and ensure that internal systems and controls remain proportionate, well documented and aligned with evolving regulatory expectations.

As the FCA continues to pursue its growth agenda, firms demonstrating strong culture, proactive remediation and effective risk management are likely to experience more constructive regulatory engagement.