- Growth and De (or Re)-regulation? This theme runs through all areas of UK financial services regulation; the tension between the need for a robust regulatory framework that adequately protects consumers and cutting red tape to support growth and innovation may continue.
Simplification of Financial Conduct Authority (FCA) rules and information, along with the reduction of the regulatory burden, were key themes of the FCA’s December 2025 letter to the Prime Minister and the Chancellor on its approach to growth. This letter followed the FCA’s initiative setting out 50 “pro-growth” measures in January 2025, which included simplifying rules for fund managers, consulting on a digital assets regime, and removing some transaction reporting requirements. This year, the FCA has committed itself to further reforming guidance for venture capital and alternative investment fund managers and to consulting on the pension charge cap.
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Continued enforcement action for financial crime failures — The FCA’s proposals to “name and shame” those subject to investigation at an early stage garnered some press in 2025. Following criticism and a report by the House of Lords’ Financial Services Regulation Committee, the FCA abandoned those proposals. In the audit and accounting context, where the Financial Reporting Council (FRC) commonly names and shames those under investigation, firms have looked to challenge the regulator.
However, the FCA may continue to push for publicity regarding entities under investigation when it considers it appropriate. We note that the FCA was recently successful in a judicial review application against a claims management company that objected to the FCA publicising that it was under investigation.
Combatting financial crime will no doubt continue to be a key focus of enforcement for the FCA into 2026, and the FCA has stated its intention to use enforcement to deliver “impactful deterrence”. Recent enforcement outcomes against Nationwide Building Society and Starling Bank (both of which the FCA hit with multi-million-pound fines) are a reminder that entities should consider maintaining effective financial crime controls and ensuring timely and effective remediation if necessary.
In response to a Freedom of Information Act request we recently submitted, the FCA confirmed that, as of 30 September 2025, it had open investigations into 116 firms and 248 individuals. This suggests that, since the significant drop-off in open enforcement actions reported between March 2024 and March 2025, the number of open FCA investigations has remained steady.
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More regulation of digital assets — In its December 2025 letter to the Prime Minister, the FCA acknowledged that fast changes in technology make outcomes-focused regulation more appropriate than prescriptive rules.
The end of 2025 also saw the publication of draft legislation on the regulation of cryptoassets. The proposals expand the scope of the FCA’s regulation of cryptoassets substantially. The FCA has started consulting on its plans for regulating the crypto assets industry. The FCA aims to have a regime that works to ensure consumer protection and trust while simultaneously supporting innovation. The consultation closes in February, and the FCA expects to finalise the regime by the end of 2026. For firms potentially impacted by the changes to the UK’s cryptoasset regulatory regime, this year may represent a shift in their need to engage with the FCA and understand their future obligations.
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New rules on non-financial misconduct — In September 2026 the FCA will amend its Code of Conduct sourcebook and Fitness and Proprietary sourcebook in relation to non-financial misconduct. The changes include an extension of the type of entities which fall within scope and a broadening of the reach of the rules, and they make clear that serious bullying, harassment and violence breach the conduct rules. The FCA has provided some examples of circumstances where conduct outside of the workplace may fall within scope of the rules, and individuals may wish to remain mindful that behaviour in their personal life may breach professional obligations.
The new conduct rules may prove an important feature of the year ahead for regulated firms. Firms may wish to consider reviewing relevant internal policies and updating them as necessary in an effort to enhance compliance frameworks.
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Continued focus on sustainability — The FCA has continued to diverge from European sustainability rules, which remain under review (in the form of the recent European Sustainable Finance Disclosure Regulation 2.0 proposals). In the UK, disclosures, ESG ratings, and transition plans remain high on the agenda; and we expect to see regulatory developments in all three areas this year. In light of its 2025 climate reporting review, the FCA is considering how it can enhance its existing sustainability reporting framework.
With regards to disclosures, the implementation of the Sustainability Disclosure Requirements continues. The end of 2025 saw the introduction of entity-level disclosure requirements for UK asset managers with over £50 billion in assets under management (AUM), and these disclosures will come into force for smaller asset managers with over £5 billion in AUM in December. In 2025, the FCA also consulted on the UK Sustainability Reporting Standards, which would implement the International Sustainability Standards Board’s sustainability disclosure standards.
The FCA is also consulting on its proposals to ensure that ESG ratings are transparent, reliable and comparable. The consultation closes at the end of March 2026, and we may see final rules toward the end of the year.
*Special thanks to Practice Support Lawyer Maisie Stewart for contributing to this GT Advisory.