The FCA’s 2025–26 Annual Work Programme: The Final Corner of a Strategic Triangle

The Financial Conduct Authority (FCA) has unveiled its Annual Work Programme for 2025–26, the new name for what was previously referred to as the ‘Business Plan’. The document sets out the new actions the FCA proposes to take, and the existing work it intends to continue, as it works towards delivery of its new strategy. It is also worth noting that publication of the new FCA 5-year strategy (on 25th March) and publication of its Annual Work Programme (on 8th April) sandwich a key government publication – its Policy Paper titled “New approach to ensure regulators and regulation support growth”.

The government Policy Paper sets out a political vision for UK regulation that will support growth, that is targeted and proportionate, transparent and predictable and that adapts to keep pace with innovation. It contains pledges from all the key regulators, including the FCA and PRA and those pledges are evident in the FCA Annual Work Programme and the PRA Business Plan, which we have reviewed in this article. The Policy Paper sets out 3 key actions for regulators and these will be the standard by which the political masters will judge the performance of the FCA and PRA. The actions are:

1. To tackle complexity and the burden of regulation;
2. Reduce uncertainty across the regulatory system; and
3. Challenge and shift excessive risk aversion in the system.

The FCA Annual Work Programme is very much in line with those actions.

Planned Work For 2025/6

The FCA plan splits its actions into the same 4 areas covered by the strategy paper. These are:

• A smarter regulator: more efficient and effective.
• Supporting growth.
• Helping consumers navigate their financial lives.
• Fighting financial crime.

As well as assessing its performance against the government Policy Paper, the FCA has laid out its own outcomes and metrics against which it will assess its work in year 1.

A Smarter Regulator: More Efficient and Effective

What the strategy paper said: the vision is to reduce the supervisory burden, streamline priorities and simplify data returns.

The 2025/6 Plan: there are 5 commitments made for 2025/6. These are:

1. Streamline data collection and improve regulatory interactions.
The FCA has already identified a number of data returns it says it no longer requires and expects to ‘switch off’ further returns, following a consultation in summer 2025. A new single point of entry sign-in process has now been launched, allowing firms to see all of their regulatory tasks in one place for the first time, with further improvements promised to make settling FCA invoices and managing My FCA users easier. RegData will also be enhanced to make submitting ad-hoc information requests easier.

2. Digitise and improve the authorisation process. The process of digitising the way firms submit authorisation applications has already started, but further improvements are promised, with the aim of encouraging higher-quality applications and improving the quality of data provided.

3. Enhance the supervision model. Already strongly sign-posted, the idea that FCA resources will be directed where the risk of harm is the greatest is committed to policy. Firms that demonstrate a culture of compliance can expect a lighter touch. Of specific note is the FCA desire to build engagement with firms not just where it sees market risk, but also where it sees opportunity. There is a much more proactive approach to fostering and supporting innovation that can help deliver the growth the FCA is tasked with facilitating.

4. Improve how the FCA uses intelligence and data to spot and act on harm. The FCA budget includes a significant capital investment in IT systems development and infrastructure and much of this will be used to help deliver on this action as it seeks to become more sophisticated in the way it targets its supervision and authorisation resources on the firms, or networks of firms, most likely to cause harm through their actions if unchecked. For those firms considering seeking authorisation, there is a big clue here on the approach to take – the more the FCA is convinced of your intent to do the right thing, the less authorisation resource is likely to be directed to dissecting your application.

5. Optimise operational performance. In simple terms, the FCA has committed to becoming more efficient.

Key year 1 metrics set: the FCA has set itself a single high-level metric in so far as assessing the success of its intent to become more efficient and effective is concerned. That is an improvement in firms’ perceived effectiveness of the FCA in regulating the financial services industry as measured by the FCA and Practitioner Panel survey. The 2024/5 score is not yet available and the current baseline is the 7.2 out of 10 from 2023/4.

Supporting growth

What the strategy paper said: the focus is to enable innovation and ensure the UK financial services sector remains competitive, whilst balancing the risk associated with regulation, markets and firms and consumers.
The 2025/6 Plan: much work was already underway here and the FCA has identified work it will continue and new work it plans to start. Innovation and the use of AI features strongly with further commitments to the development of innovation services and sandboxes. New plans include:

• A review of the GDPR rules in the context of how they affect AI innovation;
• An ‘open finance’ initiative, initially focused on SME lending;
• Streamlined data collection and improved regulatory interaction;
• A further restatement of the commitments already made following the post implementation review of Consumer Duty to streamline rules and avoid new rules where the Consumer Duty would suffice.
• An update to the redress framework;
• Making it easier for firms to start up and grow, including through investment in the authorisation process, where firms can expect more support and a faster route to trading;
• Work to improve the UK export and inward investment environment, including the setting up of new FCA offices in the US and Asia Pacific region.

Key year 1 metrics set: The FCA has set itself four key measures to assess its performance. These are

• That the UK position as one of the top global financial and FinTech centres in the world, as assessed by independent thinktank, Z/Yen, is maintained. It currently ranks the UK 2nd on both counts;
• That more firms use the FCA innovation and pre-application authorisation services;
• That there is an increase in financial services exports, as measured by the ONS; and
• That there is an increase in access to capital for businesses, as measured by the Bank of England.

Helping consumers navigate their financial lives

What the strategy paper said: the FCA recognises that an overly regulated market stifles competition which of itself can be harmful to consumers. It is seeking to shift the balance a little, making it easier for firms to innovate, but without compromising on the primary consumer protection objectives it has.

The 2025/6 Plan: there was already a lot of work underway in this area, including the work on motor finance, vulnerable customers, Consumer Duty, financial inclusion, consumer engagement and pure protection products. For those involved in the insurance market, the key new announcement is one designed to foster innovation around products that might improve consumer resilience. There is little detail of what this will entail, but firms that have such innovations in mind will find the regulator very open to discussion around how they can provide support.

Key year 1 metrics set: there are two outcomes that insurance firms should ensure they understand. These are:

• That consumers are better able to withstand a change in circumstances, an outcome very much linked to the work on Vulnerable Customers. The measure being used is an increase in the proportion of consumers who hold certain key products. In the case of general insurance, currently tracked at 84% for 2024;
• That consumers have more consistently positive experiences when engaging with financial services, measured by reference to the consumer satisfaction scores in the Financial Lives Survey. The baseline figure was 7.7 out of 10 in the 2024 data.

Fighting Financial Crime

What the strategy paper said: Firms are viewed as a critical line of defence against criminal misuse of financial services and the FCA is placing a greater onus on those firms to help it fight this battle. The strategy aims to support firms in adopting new technologies to improve their anti-crime systems while reducing associated costs.

The 2025/6 Plan: insurance firms will be aware that the FCA is very much focused on the proactive assessment of anti-money laundering systems and controls in firms it deems to be higher risk. There is now talk about the development of a robust and shared money laundering metric. New this year is investment to build a data-led detection capability using multiple data sets to increase the FCA ability to identify financial crime in regulated firms. This is an area of significant concern, but with much of the onus on firms to take the initiative.

Key year 1 metrics set: this is a difficult area to measure and the majority of the metrics relating to investment, banking and payments. There is a desired outcome set to tackle money laundering through the financial system, but with no current measure for this, beyond the level of supervisory actions taken.

FCA Budget

The budget for the Ongoing Regulatory Activities is increasing by 2.5%, much of which is a result of the National Insurance Contributions increase on its salary budget. In real terms, the FCA is demonstrating financial efficiency in its budget when it is compared to the inflationary pressures on the economy generally in the last year or so. Of the major projects which are singled out from a budget perspective, it is interesting to note that the largest capital investment remains in the delivery of the Smarter Regulatory Framework – the repeal of assimilated EU law and its replacement, where appropriate, with FCA rules tailored to UK markets. £9m is set aside for that work in 2025/6 still.

Conclusion

The FCA’s Annual Work Programme for 2025–26 presents a forward-looking strategy that balances consumer protection, market integrity, innovation, and international competitiveness. The alignment between the 5-year strategy, government Policy, the stated FCA outcomes and metrics and the new and continued work has been laid out with absolute clarity and firms should be very clear on what to expect and what will be expected of them.

It is the final corner in a strategic triangle that includes its 5-year strategy and its outcomes and metrics publication, all designed to meet the expectations set out by the government.