As the UK government continues to emphasise the need for growth and innovation, the Financial Conduct Authority (FCA) has outlined key initiatives for 2025-26.
Central to its plans is streamlining the process by which firms in the UK seek regulatory approval and authorise new products. The FCA aims to accelerate this by assigning an authorisation case officer to each firm from the outset.
In addition, the FCA is expanding its pre-application support service, making it available to all wholesale, payments and cryptoasset firms. This service provides companies seeking regulatory approval with extra support.
Nikhil Rathi, Chief Executive of the FCA, said: “We’re committed to being a smarter regulator – one that supports growth, helps consumers and fights crime. Our annual work programme details what we will deliver to achieve these goals. And today, we’re setting out how we’ll go further to help firms that want to join our markets with greater support for the application process and to test innovative products.”
Prime Minister Keir Starmer has been outspoken about the need for increased innovation and investment to revitalise the UK economy. He has also urged regulators, including the FCA, to encourage growth and reduce red tape.
Among the sectors Starmer has identified as key to driving economic growth are payments, fintech and AI. Under Starmer, the UK has adopted a relaxed stance on AI regulation, aiming to attract investment from abroad.
This approach seems to have influenced the FCA, which has outlined plans to work closely with firms to deepen its understanding and support the use of AI solutions in driving growth and enhancing competitiveness within financial markets.
In addition, the regulator announced that it would proactively signal to firms when it is “minded to approve” their applications for authorisation, provided they meet the required standards. This aims to give companies the confidence to pursue investment, knowing they are on track to secure regulated status.
BNPL progress…
In its recent announcement, the financial watchdog also confirmed that buy now, pay later (BNPL) products will soon fall under its regulatory regime.
In recent years, BNPL usage has significantly increased around the world, yet the sector has remained largely unregulated.
Countries like Australia and the US have begun introducing rules to protect consumers, though these efforts have often faced pushback from firms – the US recently reversed its clarification on BNPL due to growing pressure.
The FCA’s announcement suggests the UK may soon follow suit, potentially opting for a lighter regulatory approach, similar to its stance on AI, in a bid to attract investment. However, the UK has already missed out on major opportunities, such as the Klarna IPO.
