As we move into 2025, the FCA continues to evolve its regulatory approach. We discuss the major compliance issues facing the financial services industry and what firms need to focus on.
Firms must stay agile, adapting to new priorities and emerging risks. Here's an overview of key areas likely to be under the Financial Conduct Authority's (FCA) spotlight:
FCA Compliance Focus in 2025
Priority 1. Consumer duty maturity
With the Consumer Duty now fully implemented, the FCA will expect to see:
- Tangible evidence of improved customer outcomes
- Refined processes for identifying and addressing customer needs
- Ongoing cultural shift towards customer-centricity at all levels
Firms should consider how they can continually reinforce these principles across their organisations.
Priority 2. Operational and cyber resilience
As digital threats continue to evolve, the FCA expects organisations to implement advanced incident response capabilities, robust business continuity plans (BCPs), and scenario-based testing of both BCPs and wind-down plans.
Proactive threat intelligence and prevention measures will be crucial in mitigating risks, alongside maintaining open and transparent communication with the FCA in the event of incidents.
To meet these expectations, organisations must ensure their teams are well-prepared to handle a range of potential disruptions, strengthening resilience in an increasingly complex digital landscape.
Priority 3. Artificial Intelligence and algorithmic governance
As AI continues to reshape financial services, the FCA is actively gathering insights from firms on algorithmic decision-making, transparency in AI-driven processes, ethical deployment of machine learning models, and bias detection and mitigation strategies.
Firms must demonstrate responsible AI use and ensure that innovation aligns with customer protection and regulatory standards.
At the Skillcast Annual Summit, key considerations emerged, including the need to develop clear governance frameworks for AI systems, create mechanisms to explain and audit algorithmic decisions, and robust human oversight of algorithms and machine learning.
By prioritising these areas, firms can foster trust, accountability, and compliance in an AI-driven financial landscape.
Priority 4. Digital innovation and ethics
As financial services continue to embrace digital transformation, the FCA will prioritise the ethical use of AI and machine learning, fair treatment of customers in digital environments, the role of data in compliance functions, and the evolution of Open Banking and Open Finance initiatives.
Firms must stay informed about these technological advancements and their ethical implications to ensure regulatory alignment and customer trust. By proactively addressing these areas, organisations can navigate the digital landscape responsibly while fostering innovation and compliance.
Priority 5. Vulnerable customers in a digital age
In an increasingly digital world, ensuring the fair treatment of vulnerable customers is a key priority. Firms must provide accessible digital services that cater to all customer groups, implement proactive measures to identify digitally vulnerable individuals, and offer tailored support for those facing digital exclusion.
Sensitising staff to these challenges is essential, ensuring they can recognise and address barriers to digital access while fostering an inclusive and customer-centric approach.
Priority 6. Financial crime prevention
In 2025, combating financial crime remains a key priority for the financial services industry, with a strong focus on enhanced due diligence procedures, effective transaction monitoring systems, and robust sanctions screening processes.
As financial crime threats continue to evolve, firms must stay ahead by keeping up with the latest typologies and prevention techniques. Strengthening these safeguards will be essential in ensuring regulatory compliance, protecting customers, and maintaining the integrity of the financial system.
Priority 7. Post-Brexit regulatory landscape
Navigating the post-Brexit regulatory landscape remains a key priority for the financial services industry. As the UK’s regulatory regime continues to evolve, firms must review and adapt their regulatory change tracking processes to effectively identify UK-specific regulations and potential divergence from EU standards.
Engaging with trade associations will be crucial in staying informed and shaping industry discussions. To remain compliant, firms must also establish clear mechanisms to educate and update their personnel on regulatory changes impacting their business operations.
Priority 8. Culture and conduct in hybrid work environments
As hybrid work models continue to shape the financial services industry, the FCA will maintain a strong focus on culture and conduct in dispersed teams.
Key priorities include ensuring a robust compliance culture, implementing effective oversight and supervision in remote settings, and identifying conduct risks associated with the growing use of digital communication channels.
Organisations must establish clear mechanisms to monitor employee conduct and demonstrate how they foster a positive compliance culture across diverse working arrangements, ensuring accountability and regulatory alignment in an evolving work environment.
Priority 9. Operational resilience maturity
With the March 2025 deadline for operational resilience, the FCA will closely assess firms' ability to meet regulatory expectations. Key areas of focus include demonstrating continuous improvement in resilience, conducting regular testing of important business services, and ensuring effective governance and oversight of resilience measures.
To stay compliant and mitigate potential disruptions, firms must establish robust mechanisms that not only maintain but also enhance their operational resilience capabilities, ensuring long-term stability and regulatory alignment.
Priority 10. Enhanced focus on market abuse
The FCA is intensifying its efforts to combat market abuse across various asset classes, enhancing its ability to identify and address sophisticated forms of market manipulation.
Key priorities include strengthening response capabilities to market volatility, increasing monitoring of fixed-income and commodities markets, and improving detection mechanisms for cross-asset-class abuse.
Additionally, the FCA will publish a peer review on market abuse systems and controls at Direct Market Access providers, release revised market cleanliness data to capture anomalous trading and introduce a proportionate market abuse regime for cryptoassets.
Firms should anticipate heightened regulatory scrutiny of their market abuse prevention frameworks, particularly their capacity to detect and report suspicious activities, ensuring robust compliance with evolving regulatory expectations.
Want to learn more about FCA Compliance?
We have created an SMCR roadmap to help you navigate the compliance landscape, supported by a comprehensive library of FCA Courses.
Written by: Katharine Leaman
Katharine Leaman spent 11 years within the FCA, then oversaw compliance at two major banks. She now consults on regulatory compliance across market conduct, CASS, SMCR, FX Global Code, Outsourcing, non-financial misconduct, and conduct risk. Her consultancy provides regulated firms with digital regulatory compliance materials.
