FCA Annual Work Programme: How Firms Should Prepare

The UK financial services landscape is entering a distinctly different regulatory phase, with the Financial Conduct Authority (FCA)moving from a largely reactive, correspondence-driven model to a more continuous, data-led supervisory system that is explicitly outcomes-focused. The direction of travel is not incremental; it is structural.

Key takeaways

• The FCA is moving to real-time, data-led supervision - Regulation is shifting from periodic reporting and reactive oversight to continuous monitoring powered by AI, data analytics, and outcomes-based supervision.

• Consumer Duty is becoming the core enforcement framework - Firms must now prove measurable customer outcomes, not just technical compliance, with greater scrutiny on vulnerability, product value, and customer understanding.

• Financial crime controls are expanding beyond compliance teams - AML, fraud, digital harms, finfluencers, and online promotions are becoming enterprise-wide risk issues requiring integrated monitoring across marketing, products, and distribution.

• Growth and innovation will come with higher accountability - The FCA is encouraging faster market entry, Open Finance, and crypto regulation, but firms will face tougher expectations around resilience, governance, and operational controls.

• Compliance is evolving from interpretation to evidence -Boards and senior leaders must demonstrate continuous governance, data quality, and auditable evidence of good outcomes in real time, not just policy alignment.

At its core, the agenda of the FCA over the next five years converges around four reinforcing themes:

1. smarter regulation
2. growth and market access
3. stronger consumer protection
4. an expanded financial crime mandate

These are no longer parallel workstreams; they are becoming a single supervisory architecture powered by data, artificial intelligence, and sharper accountability.

The FCA's 2025/26 work programme (previously known as the FCA business plan) signals a shift from supervising firms to engineering the conditions of financial markets themselves through data, infrastructure, and outcomes-based regulation. For financial services firms, this changes the operating question from "Are we compliant?" to "Can we evidence better outcomes, continuously, at scale, and in real time?"

Financial inclusion and pensions are strategic economic tools

Financial inclusion and pensions are part of the less obvious but important FCA signals, forming part of their 2025-2030 strategy. Other signals include:

• Financial inclusion strategy support (with Government)
• Workplace savings expansion
• Pension dashboards and long-term value frameworks
• Value-for-money consolidation agenda

How should financial services firms interpret the FCA’s 2025/26 work programme?

The FCA’s annual work programme is no longer a static list of supervisory priorities. It is becoming a coordinated operating model for how regulation is applied in practice - it is faster, more data-driven, and increasingly focused on demonstrable customer outcomes.

Rather than responding to isolated policy updates, firms now need to understand the programme as a single shift in direction: towards real-time supervision, AI-enabled oversight, and enforcement anchored in Consumer Duty and financial crime effectiveness.

Against that backdrop, seven key themes define what firms need to prepare for and embed into their operating models.

1. The new regulatory model: From reporting burden to behavioural supervision

The FCA’s work programme signals a decisive shift in how supervision is delivered:

• AI-enabled supervision is reducing reliance on static reporting and increasing real-time interrogation of firm data.

• Low-value reporting is being removed, including certain nil returns, but replaced with deeper scrutiny where risk is detected.

• Annualised thematic priorities are replacing fragmented supervisory letters, creating clearer, but sharper, expectations.

This is not deregulation; it is selective intensification. Firms will experience less administrative friction overall, but significantly faster escalation where outcomes fall short.

At the same time, proportionality within SMCR is evolving. While governance expectations remain firm, there is greater flexibility in structure, provided accountability, data quality, and customer outcome evidence are robust.

Implication for boards: oversight must move from periodic assurance to continuous evidence. Gap analyses against FCA priority documents should translate into board-level implementation plans with measurable MI and tracked remediation progress.

2. Growth and market entry: Faster entry, higher competitive pressure

A central pillar of the FCA’s agenda is supporting UK market growth through controlled acceleration of entry and innovation.

Key developments include:

• Provisional licensing regimes, enabling time-limited permissions for new entrants.
• Increased scrutiny of governance, wind-down planning, and operational resilience for new firms.
• Expansion of regimes for cryptoassets and other high-growth markets, alongside tighter AML, sanctions, and market abuse controls.
• Sectoral prioritisation, including areas such as defence-related investment flows.

The message is clear: entry is becoming easier, but survival standards are rising.

For incumbents, this creates asymmetric pressure. New entrants may move faster, but must prove resilience quickly. Incumbents, by contrast, are expected to demonstrate equal or higher agility without structural weakness.

Strategic response: firms should reassess competitive positioning through a regulatory lens, particularly around onboarding speed, product governance, and operational resilience.

Open Finance and data access are a major growth lever

The FCA is explicitly investing in:

• Open Banking expansion into Open Finance
• SME lending as a priority use case
• Broader consumer data portability and ecosystem growth

This is more than innovation policy; it is a platform shift in financial services distribution and product design.

Crypto is now a full regulatory perimeter (not an emerging one)

The FCA annual work programme outlines:

• Full FSMA-based crypto regulatory regime
• Formal authorisation gateway
• Transition from AML-only supervision to full conduct and prudential oversight
• Strong focus on consumer protection, custody, and market integrity

3. Retail markets: Consumer Duty becomes the enforcement engine

Retail financial services remain the FCA’s most operationally intensive focus area. The regulatory centre of gravity is now firmly anchored in Consumer Duty outcomes, with enforcement increasingly driven by data and behavioural evidence.

Key priorities shaping retail supervision:

• Buy-now-pay-later (BNPL) regulation, with rapid implementation expectations around affordability, arrears management, and forbearance.
• Expansion of "targeted support" frameworks, bridging the gap between general guidance and regulated advice.
• Intensified scrutiny of vulnerable customers, particularly at lifecycle stress points such as bereavement or financial distress.
• Stronger oversight of product governance and distribution transparency, including steering practices in mortgage and advisory channels.

A major structural shift is emerging: firms capable of industrialising light-touch suitability at scale will gain competitive advantage, particularly in mass retail investment markets.

However, the boundary between guidance and advice is becoming a regulatory fault line. Where firms blur this distinction without robust controls, supervisory intervention is likely to be early and decisive.

Core requirement: firms must be able to demonstrate not only that products are suitable, but that customers understand them, persist with them appropriately, and achieve expected outcomes.

4. Financial crime and digital harm: From compliance function to core risk infrastructure

Financial crime expectations are expanding both in scope and sophistication. The FCA is moving toward a model where financial crime controls are not standalone systems but embedded across product, marketing, and distribution.

Key developments include:

• Expansion of AML supervision beyond financial services into adjacent professional sectors.
• Increased use of real-time data analytics for market abuse detection.
• Heightened focus on online harms, including misleading financial promotions and influencer-led marketing ("finfluencers").
• Stronger expectations for social media surveillance, affiliate governance, and content approval workflows.

This effectively brings marketing, digital engagement, and distribution oversight into the core compliance perimeter.

Firms with retail exposure must now treat digital channels as regulated risk environments, not marketing extensions.

Operational requirement: firms need integrated typology libraries, real-time monitoring models, and escalation processes that link directly to outcomes and customer harm indicators.

Data, intelligence, and "network enforcement" is becoming operational

The FCA's annual work programme outlines:

• Network analytics to detect harmful clusters of firms/individuals
• Cross-agency data sharing for financial crime
• Real-time intelligence feeding supervision and enforcement
• Faster escalation on high-risk signals

5. Wholesale markets: Resilience, AI governance, and conduct expansion

Wholesale supervision is becoming more technologically and culturally explicit.

Key focus areas include:

• Operational resilience and data integrity
• Responsible deployment of AI, DLT, and emerging technologies
• Expansion of non-financial misconduct expectations, including planned reviews of wholesale brokers
• Stronger scrutiny of conflicts of interest and governance structures

Boards are now expected to formalise oversight of AI systems, including:

• Model risk governance
• Data lineage and explainability
• Testing frameworks
• SMCR accountability mapping for automated decision-making systems

A critical shift is that supervisors themselves are using AI tools to interrogate firm data. This will reduce tolerance for inconsistent, delayed, or poorly structured data submissions.

Consequence: regulatory engagement cycles will shorten, but intensity will increase.

6. Smarter regulation: Efficiency up, tolerance down

The FCA’s "smarter regulation" agenda is often misinterpreted as lightening the burden. In reality, it is a reallocation of scrutiny:

• Less focus on routine reporting
• More focus on outcomes, resilience, and financial crime effectiveness
• Faster supervisory queries with shorter response timelines
• Greater reliance on firm-level data quality and evidence trails

SMCR reforms may introduce structural simplification, but they do not dilute accountability. Instead, they shift emphasis toward demonstrable decision-making discipline.

Firms that fail to modernise MI systems and governance documentation will face longer remediation cycles, even if their underlying controls are sound.

"Smarter Regulation" is also about regulatory redesign, not just efficiency

The FCA's annual work programme states that it is actively rewiring how regulation is built and maintained.

Key additions from the work programme:

• Reforming and replacing assimilated EU law with tailored FCA rules
• Streamlining regimes such as SM&CR, transaction reporting, and fund regulation
• A deliberate shift toward a "smarter regulatory framework" programme of simplification and redesign

Strong emphasis on "reducing regulatory burden" but selectively

The FCA is explicit about reducing burden in specific areas:

• Transaction reporting simplification
• Streamlining fund regimes
• Making SMCR more efficient and outcomes-focused

However, this is paired with increased intensity in high-risk areas.

This is not across-the-board deregulation; it is burden reduction with targeted escalation.

7. What firms must do now: Execution over interpretation

Across all sectors, the regulatory signal is consistent: execution quality is now the differentiator.

Over the next 12–18 months, leading firms will:

a. Embed Consumer Duty into operational reality

• Convert principles into measurable outcome metrics
• Implement continuous testing of customer understanding and product value
• Strengthen vulnerability segmentation and monitoring

b. Industrialise targeted support models

• Define clear guardrails between advice and guidance
• Build scalable, auditable decision frameworks
• Implement robust MI linking support interactions to outcomes

c. Upgrade financial crime infrastructure

• Modernise surveillance systems using real-time data
• Tighten controls around digital marketing and influencers
• Strengthen escalation and investigation workflows

d. Prepare for new market regimes

• Cryptoasset readiness (AML, sanctions, market abuse controls)
• Provisional licensing competition preparedness
• Wind-down and resilience planning stress-tested against scenarios

e. Strengthen governance and evidence discipline

• Board-level ownership of regulatory change portfolios
• Decision logging aligned to Consumer Duty and conduct expectations
• Audit-ready evidence trails for all key customer journeys

A shift from compliance to proof

The FCA's direction is unambiguous: regulation is becoming faster, more data-driven, and more outcome-specific. The perimeter is expanding into digital behaviour, marketing ecosystems, and technology infrastructure, while traditional reporting obligations are being streamlined.

But the trade-off is not lighter regulation; it is stricter accountability for measurable results.

Firms that invest in automation, governance clarity, and real-time outcome measurement will gain regulatory headroom and commercial advantage. Those that treat flexibility as an opportunity to reduce discipline will find supervisory intervention arriving earlier and resolving more slowly.

In this new regime, compliance is no longer the objective. Proven customer value, continuously evidenced, is the operating standard.