FCA sets out next phase of smarter, more effective regulation

The new authorisation tool is being developed internally and will be integrated into existing FCA systems.

It forms part of our annual work programme 2026/27[1], which lays out how we’re accelerating our ambition to be a smarter, more data-driven regulator.

We will also use generative AI to support our efforts to modernise regulation, streamline supervision and improve firms’ experience, by reducing unnecessary administrative burdens.

We’re only proposing to raise minimum and flat fees by 1%, even after significantly investing in data analytics and digital tools to improve how we triage information and share intelligence more efficiently. This is the lowest rise in the fees budget since 2017/18 and well below the rate of inflation. It’s the lowest annual funding requirement (AFR) increase in a decade, at just 0.7%.

Nikhil Rathi, chief executive, FCA, said:

'This year’s programme builds on our ongoing drive towards smarter, more data-driven regulation, helping us identify risks sooner, make faster, more consistent decisions and reduce unnecessary burdens on firms. We’re focused on helping consumers navigate their financial lives, reinforcing trust in financial services and supporting growth and competitiveness while keeping our fee increases low.'

A smarter, more efficient and effective regulator

The programme outlines major initiatives to simplify processes, remove friction where appropriate, and help firms operate more efficiently, while ensuring high standards are maintained across the financial sector:

• Integrating AI into regulatory workflows – enabling us to detect harm more effectively and speed up regulatory decision-making. 
• Using generative AI to review documents received from firms – supporting faster decisions. Following successful testing, we will begin rolling out across authorisations and supervision. 
• Using a new sandbox environment to test automated data feeds between the FCA and firms – reducing manual effort and improving the timeliness and reliability of intelligence.
• Investing in smarter case handling – using analytics and digital tools to quickly identify the greatest sources of harm and triage intelligence more efficiently.
• Expanding the Supercharged Sandbox – opening to a new cohort of firms and giving them access to high-quality synthetic data so innovative, AI-driven financial products can be safely tested. 
• Reducing burdens on firms – removing 3 more regular data returns, reducing the frequency of another, and moving more regulatory tasks onto My FCA, so firms can manage everything in one place. 
• Improving firms’ experience of regulation – with faster authorisation timelines, simplified digital forms, and a new scorecard to better understand and respond to what firms need. 

Supporting growth, helping consumers and fighting financial crime

We are also continuing to support economic growth, help consumers navigate their financial lives and fight financial crime: 

• Unlocking capital investment and liquidity across UK markets – including consulting on the pension charge cap with the aim of facilitating access to a broader range of asset classes while maintaining an appropriate degree of consumer protection. 
• Further speeding up initial public offering applications – by proposing removing the 7-day research waiting period.
• Expanding our overseas presence – to the United Arab Emirates, China and India.
• Beginning regulation of deferred payment credit (Buy Now Pay Later) – from July we will be requiring affordability checks and reviewing authorisation applications. This ensures consumers receive appropriate protections while keeping the product widely accessible.
• Creating a single, end-to-end, intelligence-led service – to spot and stop the highest harm financial promotions faster, at lower cost and in a more consistent way.

The annual work programme 2026/27 provides a clear roadmap of the action we will take over the next 12 months to deliver on our strategy and ensure the UK remains a leading, competitive and well-regulated financial centre.

Consultation on our fees and levies

We have also published a consultation on our fees and levies[2] for the year ahead. 

We are proposing to increase minimum and flat rate fees, as well as application fees, by 1% – in line with the increase in ongoing regulatory activities (ORA) budget and below the rate of inflation.  

To keep fee increases to a minimum, we have kept our budgeted headcount flat, which accounts for around two-thirds of our costs, and have looked to absorb inflationary increases and cost uplifts by finding efficiencies and identifying savings in our budget. This is the lowest rise in the ORA fees budget since 2017/18 and the lowest AFR increase in a decade, at just 0.7%.

The 0.7% AFR increase reflects what we need to collect from firms in fees. The budget sets out how that funding is allocated across our ongoing regulatory work, exceptional projects and core operating costs.

Perimeter report

We have also published our perimeter report for 2026/27[3], setting out the most significant issues at the edge of our remit, including where legislative change may be needed to better protect consumers, markets and support sustained economic growth.  

We’re asking for government action on 15 areas where changes to our perimeter are needed, including:

• Exemptions in the Financial Promotion Order – the removal of self-certification and higher thresholds for high net worth/sophisticated investors, to close consumer protection gaps.
• Trustees – tightening the regime for when trustees require authorisation, to reduce consumer harm and financial crime risks.
• Sports and non-financial spread betting – clarity from the Treasury on the regulatory boundary for these products, which we consider better suited to a distinct regulatory framework.
• Payments – changes to modernise the regulatory framework so it is agile enough to mitigate new and existing risks (eg financial crime) and support innovation. For open banking, we propose unlocking the benefits of secure data sharing and driving forward open finance to boost innovation, competition and long-term economic growth. 

Key new issues highlighted in this year’s report that fall outside our perimeter and may pose risks to consumers include:

•  ‘Annex 1 firms’ that are only regulated for money laundering purposes and not subject to our wider rules, that also create risks for regulated firms doing business with them.
• The growing use of general-purpose AI for guidance on borrowing, saving and investing
• Speculative prediction market products, which have expanded rapidly overseas.

We have now also published all our Regulatory Priorities[4], giving firms a clear view of where we are focusing our efforts in the year ahead.