FCA Strategy 2025–2030: the FCA's Balancing Act on Growth
Key Takeaways
- Growth Priority: The FCA has elevated growth from a secondary objective to an explicit strategic priority that will likely shape future supervisory and policy decisions.
- Limited Deregulatory Signal: The article argues the strategy points more toward incremental adjustments within existing standards than any broad deregulation of financial services rules.
- Proportionality Tension: Supporting growth may depend on more proportionate supervision, especially where smaller firms face compliance costs disproportionate to their scale.
- Transaction-Reporting Friction: Current reporting obligations are portrayed as insufficiently sensitive to firm size, potentially constraining capital available for smaller firms to grow.
- DP24/2 Constraint: The proposed transmission-model relief may not lower costs meaningfully if few larger firms volunteer to report on behalf of smaller participants.
To Regulate or Deregulate the FCA's Balancing Act on Growth
In our article on 15 July 2025, we discussed the FCA's Strategy 2025-2030 (Strategy) publication and the FCA's concept of being a smarter regulator priority within that. In this article we will cover the FCA's Supporting Growth priority.
The FCA defines the Supporting Growth priority as:
"... enabling investment, innovation and ensuring the continued competitiveness of our world-leading financial services"
[adding that] "regulation play an important part in the UK maintaining its position as a preeminent financial centre and in supporting economic growth."
It is fair to say that this part of the Strategy is not overly detailed. It certainly doesn't give the impression that the FCA is about to embark on ground-breaking change or reform anytime soon. This is despite the FCA being under pressure from the government to be less risk adverse and to do what they can to encourage and promote growth in financial services.
The FCA has switched growth from a long-time secondary objective to an explicit priority, so expect growth and how to achieve it to remain front and centre of any FCA decision making. Whilst this may result in some small wins, such as tweaks to current regulation to make them more business friendly, or via the removal of redundant requirements, those expecting this to signal the start of widespread deregulation will unfortunately be disappointed.
Rather than committing to widespread deregulation the FCA has made it clear it will rely on existing standards and achieve positive outcomes through these. The good news is that there seems to be a focus on rules that currently exist, rather than the creation of new rules. The last thing anyone would want is more rules!
Proportionality was a key theme of the previous article, and proportionality could play a role in how the FCA looks to support growth. One way the FCA could try to achieve this is by ensuring it adopts a proportionate approach to taking supervisory action. By this we mean opting for the softer approach where possible, as unduly punishing growing firms for minor infractions will not help the FCA achieve its stated aim of supporting growth.
In the transaction reporting space, there is scope to apply proportionality based on the size and complexity of the reporting firm. This would allow the cost of compliance to be more aligned with the firms growth stage. An option for adding some proportionality for small firms was put forward by the FCA in Discussion Paper (DP) 24/2. Unfortunately, much like the approach proposed to support growth in the Strategy, this appears to be an unsatisfactory adjustment that stays within the confines of existing rules rather than the fundamental change that's truly needed.
It is a positive that the FCA acknowledges the costs of transaction reporting for smaller firms within the DP. However, it is arguable that the current reporting requirements placed on all firms, which treat all in-scope firms the same regardless of size and the number of transactions executed per year, are disproportionate. This lack of proportionality arguably does not support the governments pro-growth agenda imposing significant costs on smaller firms will reduce the amount of capital they have available to invest and grow or deter firms from establishing themselves within the UK.
The DP moots a possible option to resolve the current lack of proportionality smaller firms could comply with the transmission requirements under Article 4 of RTS 22 MiFIR to remove the obligation to directly report themselves.
The main criticism of this proposal is that it is difficult for smaller firms to identify and enter into agreement with larger firms that would report on their behalf. A possible solution for this issue suggested in the DP is the creation, maintenance and publication of an opt-in register of UK investment firms that are willing to act as a receiving firm and report on behalf of a smaller firm.
The obvious flaw with this suggestion is that not many firms will opt-in to the register, resulting in a lack of options for smaller firms. In turn, the lack of competition will mean that larger firms can increase the cost of providing this service. As a result, the intended outcome of reducing costs for smaller firms may not be achieved.
The FCA published the DP in November 2024. It will be interesting to see what the FCA proposes in its follow-up Consultation Paper, which should be due shortly, given it has been over six months since the publication of the DP. Watch this space!
How Qomply can help
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Frequently asked questions
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It is about the FCA's stated priority of supporting investment, innovation, and UK financial-services competitiveness. The article examines how that priority may affect regulation rather than treating it as a promise of broad deregulation.
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No, it does not. The article says firms expecting sweeping deregulation are likely to be disappointed because the FCA appears more focused on modest adjustments within the existing framework.
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It links proportionality to the idea that compliance costs should better reflect firm size and complexity. The article says the current model treats all in-scope firms too similarly regardless of how many transactions they execute.
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It discusses the option of allowing smaller firms to comply through Article 4 transmission arrangements instead of reporting directly. The article says the FCA also floated an opt-in register of firms willing to report on behalf of smaller firms.
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It says too few firms may join the register, leaving small firms with limited choice and higher service costs. The article argues that this could undermine the intended goal of reducing reporting costs for smaller firms.
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