May 14, 2025

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by: kiran

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Tags: "Regulation"

FCA 2025/26 Priorities: What Insurance Firms Need to Know

Key Highlights

Smarter Regulation: Streamlining Compliance

The FCA is committed to reducing the regulatory burden on firms. Key initiatives include:

  • Data Collection Simplification: The FCA plans to stop three regular data returns (consulted on separately in CP25/8 “Data Decommissioning: Removing reporting and notification requirements”), benefiting 16,000 firms. Additional consultations on further reductions are scheduled for summer 2025.
  • Enhanced Digital Tools: The “My FCA” platform now consolidates regulatory tasks, including fee payments and user administration, simplifying compliance processes.
  • Flexi Collections: A new capability within RegData will enable firms to submit ad-hoc information requests more efficiently.

Supporting Growth: Unlocking Opportunities

The FCA aims to foster a competitive and innovative financial services industry. Highlights include:

  • Capital Investment Review: Accelerating the review of capital requirements for specialised trading firms to unlock liquidity and support economic growth.
  • Open Banking and Open Finance: Increased funding for these initiatives—with a 158.1% budget increase—signals a push for innovation. While not exclusive to insurance firms, this presents opportunities to develop innovative financial products, enhance customer experience through data-driven solutions, and create personalised offerings.

Helping Consumers: Enhancing Financial Well-being

Firms should adapt to evolving consumer needs and regulatory expectations:

  • Market Studies: Assessing whether protection products (e.g. term assurance, critical illness cover) and premium finance for motor/home insurance offer fair value.
  • Motor Insurance Task Force: Collaborating with the government to stabilise or reduce motor insurance premiums.
  • Mortgage Rule Review: Simplifying responsible lending and advice rules to support homeownership and remortgaging without regulated advice.

Fighting Financial Crime: Strengthening Integrity

The FCA continues to prioritise efforts to combat financial crime:

  • Crypto Regulation: Developing a stable UK crypto regulatory regime, with consultations on regulated crypto activities in 2025 and policy statements in 2026.
  • Financial Promotions: Enhanced scrutiny on cryptoasset financial promotions to ensure market integrity.

ESG and Sustainability: New Focus Areas

The FCA is introducing new charges for ESG data and ratings, reflecting the growing importance of environmental, social, and governance (ESG) factors in financial services. Insurance firms may need to incorporate ESG considerations into underwriting processes and product offerings.

What Firms Need to Do

1. Streamline Compliance Processes

  • Review Data Submissions: Monitor CP25/8 and upcoming summer consultations for updates.
  • Adopt Digital Tools: Use the “My FCA” platform to consolidate tasks, manage user admin, and streamline fee payments.
  • Leverage Flexi Collections: Prepare your team to use RegData’s new ad-hoc information submission tool.

2. Focus on Consumer Outcomes

  • Evaluate Product Value: Ensure protection and premium finance products offer fair value—review all products.
  • Engage in Motor Insurance Discussions: Participate in government-led efforts to address premium stabilisation.

3. Strengthen Financial Crime Measures

  • Prepare for Crypto Regulation: Review your firm’s crypto exposure and readiness for consultations and upcoming regulatory frameworks.
  • Enhance Promotions Compliance: Align all marketing and promotional activity with new FCA rules, particularly regarding cryptoassets.

4. Embrace Growth Opportunities

  • Capitalise on Open Finance: Explore innovations using the increased funding for open banking and finance initiatives.

5. Integrate ESG Considerations

  • Prepare for ESG Data Requirements: Build ESG strategies into underwriting, product development, and reporting frameworks.

6. Budget for Regulatory Changes

  • Plan for Increased Fees: Account for the FCA’s 3.8% increase in the Annual Funding Requirement (AFR) in your financial planning.

How We Can Help

Navigating these changes requires strategic foresight and operational agility.

We offer tailored solutions to help regulated insurance firms:• Streamline compliance processes

  • Leverage growth opportunities arising from regulatory change
  • Enhance consumer engagement strategies
  • Strengthen anti-financial crime measures

Contact us to discuss how we can support your firm in staying ahead of regulatory changes.