Introduction

The Financial Conduct Authority (FCA) has announced a series of proposed reforms aimed at simplifying and streamlining regulatory requirements for UK financial services. These changes, part of a broader push to reduce red tape post-Brexit, are expected to take effect in 2025 and will impact firms across multiple sectors—including mortgages, consumer credit, retail banking, and investment services.

While the regulatory burden has long been a source of frustration for businesses, these changes represent a pragmatic shift: empowering firms with greater flexibility, reducing administrative drag, and supporting innovation without compromising consumer protection.

In this post, we break down the five key areas where the FCA is easing red tape, and what this means for your business in practical terms.

 

Consumer Credit: Lighter Touch, Greater Clarity

The FCA plans to overhaul consumer credit regulations to reduce ambiguity and improve accessibility for both firms and consumers.

Key proposed changes include:

• Replacing the complex Consumer Credit Act 1974 with a more intuitive, principles-based framework.
• Introducing simplified language requirements for pre-contract information and agreements.
• Streamlining authorisation and supervision processes for smaller credit firms.

 

What this means for businesses:

These changes will likely reduce the legal and operational overheads for consumer lenders and credit brokers, particularly those servicing niche or underserved markets. A more agile regime could also encourage innovation in the BNPL (Buy Now, Pay Later) and embedded finance space.

 

Mortgages: Faster Approvals and Less Duplication

Mortgage firms can expect greater flexibility and reduced paperwork under the FCA’s revised rules.

Key highlights include:

• Simplifying the Mortgage Conduct of Business (MCOB) rules to focus on outcomes rather than prescriptive procedures.
• Reducing duplication in affordability assessments and KYC procedures, particularly for remortgaging.
• Faster approval pathways for new mortgage products.

Practical impact:

Lenders, brokers, and intermediaries will benefit from quicker time-to-market and less duplication in client assessments, potentially improving customer journeys while reducing compliance costs.

 

Retail Banking: Simplified Compliance and Operational Relief

Retail banking has often borne the brunt of regulatory intensity due to its centrality in consumer financial health. The FCA is aiming to reduce this load without sacrificing customer protections.

Notable simplifications include:

• Consolidating regulatory returns and reporting schedules for smaller banks.
• Loosening rules around legacy IT systems during digital transformation projects.
• Rationalising product governance obligations for basic banking products.

Why it matters:

By easing operational constraints, these changes free up capacity for banks to focus on innovation, whether that’s improving online banking UX or expanding financial inclusion initiatives. Expect this to benefit challenger banks and building societies in particular.

 

Investment Services: Streamlined Disclosure Requirements

The FCA is aligning with international efforts to reduce unnecessary disclosure burdens, particularly in the investment and wealth management sector.

Expected changes:

• Simplification of the client onboarding process and suitability assessments.
• Revisions to PRIIPs (Packaged Retail and Insurance-based Investment Products) regulations.
• Removal of overlapping reporting requirements from MiFID II and other frameworks.

For investment firms:

This means a reduction in compliance friction, especially helpful for boutique firms or new market entrants looking to focus resources on performance, not paperwork. There’s also potential upside for clients, who may receive clearer, less jargon-heavy information.

 

Cross-Sector Reforms: Proportionality and Digital Innovation

The most transformational changes may not be sector-specific but instead reflect a broader shift in regulatory philosophy.

These cross-sector reforms include:

• Applying a ‘proportionality principle’ to smaller firms to reduce excessive compliance load.
• Encouraging the use of RegTech solutions to meet reporting and compliance obligations.
• Expanding the FCA’s Digital Sandbox to help firms test new propositions in a controlled environment.

Strategic implications:

Whether you’re in payments, insurance, or a fintech start-up, the reforms point toward a more supportive, innovation-friendly regulatory landscape. With proportionality built into the system, firms can scale with more confidence and less red tape.

 

Final Thoughts: A Turning Point in UK Regulation

The FCA’s efforts to reduce regulatory burden aren’t just administrative, they’re strategic. By simplifying rules, streamlining compliance, and encouraging innovation, the UK is laying the groundwork for a more competitive financial ecosystem.

But as with all regulatory changes, success lies in preparation. Firms that proactively adapt, streamlining internal processes, adopting automation, or exploring outsourcing solutions, will be better placed to thrive in this new landscape.

Need support navigating this regulatory shift?

Alpha offers scalable BPO solutions to help financial firms stay compliant, cost-efficient, and focused on growth.