FCA Announces Sweeping Regulatory Reforms to Boost UK Financial Services Growth

The Financial Conduct Authority has unveiled an ambitious package of regulatory reforms designed to accelerate growth in UK financial services, following Chancellor Rachel Reeves' Mansion House speech declaring that regulation acts as "a boot on the neck of business".

 

The comprehensive changes, announced on 15 July 2025, represent what the Government describes as the biggest cut to financial services regulation in a decade, targeting multiple areas from authorisation processes to senior manager requirements.

 

Faster Authorisation Targets

The FCA has announced significantly reduced timelines for firm and individual authorisations, recognising their potential to support UK growth and competitiveness. The regulator aims to deliver a quicker, more proportionate and predictable approach whilst maintaining high standards of entry into regulated financial services.

 

Key changes include statutory requirements for new firm authorisations and variations of permission applications to be completed within four months for complete applications, reduced from six months, and 10 months for incomplete applications, down from 12 months. For variations where new permissions closely align to existing business models, voluntary targets will reduce further to three months for complete applications and six months for incomplete applications.

 

Payment and e-money firm authorisations will be completed within three months for complete applications, unchanged from current targets, but reduced to 10 months for incomplete applications from 12 months. Senior manager regime applications will see at least half completed within 35 days, with a proposed statutory deadline of two months for all applications, reduced from three months.

 

Sheree Howard, Executive Director of Authorisations at the FCA, said: "We are taking forward the Government's new proposals and are prepared to go further and faster to facilitate growth. In doing so, however, we will maintain a robust authorisations process that helps safeguard the integrity of the UK's competitive financial services market while protecting consumers."

 

The FCA will measure performance against the proposed new statutory deadlines and voluntary targets from January 2026, building on current performance where 99% of applications are now determined within statutory deadlines.

 

 

Senior Manager Regime Streamlined

Working alongside the Prudential Regulation Authority, the FCA has proposed significant streamlining of the Senior Managers & Certification Regime (SM&CR) in the first phase of reforms. The changes aim to make the regime more effective and efficient whilst driving growth in financial services.

 

The proposals include giving firms more time and flexibility to submit applications for approving new senior managers during unexpected or temporary changes, stripping out duplication where individuals are certified for separate functions, and providing guidance on streamlining annual checks firms undertake to certify individuals are 'fit and proper'.

 

Other improvements include allowing more time for firms to report updates to senior manager responsibilities, increasing validity periods for criminal record checks, and giving firms more time to update the directory listing certified staff. The reforms could reduce certification roles by 15% through elimination of duplication.

 

Nikhil Rathi, Chief Executive, FCA

 

Nikhil Rathi, Chief Executive of the FCA, said: "Integrity and accountability at the top matter, which is why there is widespread support for the Senior Managers and Certification Regime. We are proposing streamlining the rules, so they work better for industry and support competitiveness and our approach to outcomes-based regulation, while maintaining the high standards the regime has set."

 

The consultation on these changes closes on 7 October 2025, with HM Treasury also consulting on legislative changes that could enable further reforms in a second phase.

 

 

Broader Capital Markets Reforms

The FCA has outlined an extensive programme of capital markets reforms designed to maintain the UK's position as one of the most competitive places globally to raise capital and invest. The regulator emphasises that these reforms build on strong foundations, noting the UK has the largest capital markets in Europe whilst London remains the world's second biggest financial services centre.

 

Recent achievements include simplifying company listing processes, overhauling the prospectus regime, introducing a new public offer platform, and giving investment firms more choice in research payment methods. Sweeping reforms to bond and derivatives rules will reduce costs and ensure investors access better, quicker and clearer data.

 

The FCA has also introduced PISCES, a new private stock market enabling investors to buy stakes in growth companies, and established a Digital Securities Sandbox helping firms test innovative technology.

 

Looking ahead, the regulator plans to establish a consolidated tape for bonds this year and consult on an equities consolidated tape in Q4. Reviews of professional investor definitions and retail consumer investment access are planned for Q4, alongside proposals to improve transaction reporting data quality whilst reducing firm costs.

 

 

Political Context, Industry Response

The regulatory reforms come as Chancellor Rachel Reeves promises to sweep away red tape across the economy, arguing that Britain has engaged in a corrosive attempt to eliminate risk. According to the Financial Times, her Mansion House speech declared that regulation in too many areas "acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of growth".

 

The Chancellor's overarching message emphasises that Britain needs to take more risks, arguing that the regulatory culture established after the 2008 financial crisis has gone too far. The FT reports this includes reforming bank ringfencing rules, cutting capital and reporting requirements, and launching a new Listings Taskforce to support business growth.

 

However, some observers remain sceptical about whether Labour has delivered reforms on the scale needed to transform the economy. Helen Miller, Director of the Institute for Fiscal Studies, told the Financial Times that despite policies to boost public investment, "it doesn't feel like a radical change" and questioned whether the Government was "throwing the kitchen sink" at growth.

 

 

Industry Impact

For regulated firms, the changes represent the most significant regulatory shift in over a decade. The combination of faster authorisation processes, streamlined senior manager requirements, and broader capital markets reforms signals a fundamental change in the FCA's approach from what the regulator describes as "pre-emptive gates and checks" towards "transparency and disclosures".

 

The reforms give firms more freedom to act whilst helping investors make informed decisions, with the FCA emphasising this will ensure markets remain world-leading. As the regulator continues its ambitious programme, it has committed to ongoing industry engagement, listening to feedback and piloting new ideas whilst working at pace with Government and industry to deliver the changes.

 

The comprehensive nature of these reforms reflects the Government's determination to position the UK as a more competitive destination for financial services, though the success of these changes will ultimately be measured by their impact on economic growth and market competitiveness in the coming years.