Clifford Chance

The Financial Conduct Authority (FCA) has launched its comprehensive Five-Year Strategy (2025-2030), directly underpinned by the detailed operational priorities in its Annual Work Programme 2025/26. This integrated approach sets an ambitious agenda with the aim to deepen trust, rebalance risk, support growth, and improve consumers' financial lives.

The new strategy also reflects the UK Government's call for regulators to actively support economic growth – most notably within the FCA's "Supporting sustainable economic growth" priority. This marks a deliberate shift towards a more "proportionate and predictable" regulatory approach, building on the achievements of the FCA's previous three-year strategy which focused on setting high standards and operational effectiveness.

This article examines the combined potential impact on the insurance industry, highlighting workstreams directly relevant to the sector.

Strategy & Work Programme Alignment

The FCA's Strategy 2025-2030 is based on four key priorities, each with a 'strategy focus' with the delivery set out in actions outlined in the Annual Work Programme 2025/26:

1. Being a smarter regulator:

• Strategy Focus: The FCA plans to boost efficiency by leveraging technology to ease reporting burdens and streamline processes, such as digitising the authorisations process. They emphasise proportionate regulation, prioritising fewer areas for greater impact and more targeted supervision. The FCA intends to enhance operational efficiency by expanding dedicated contact points such as 'My FCA', a single digital service for regulatory tasks (data, fees, queries). The aim is to benefit firms without dedicated FCA supervision, such as insurance intermediaries. The FCA will also adopt a flexible approach, with less intensive supervision for those "demonstrably seeking to do the right thing."
• Work Programme Integration: The FCA plans to streamline data collection by reviewing and potentially discontinuing certain regular data returns, a measure projected to initially benefit 16,000 firms, with further consultations of data reforms planned. To enhance data analysis capabilities for supervision and enforcement, a new regulatory reporting platform is being developed, starting with RegData (which will replace Gabriel). Additionally, the FCA will use AI and other advanced technologies to improve intelligence gathering and risk assessment, alongside efforts to digitise and simplify the authorisation processes.

Insurers stand to gain from a more proportionate regulatory environment that actively fosters innovation. Simplified authorisations are encouraging, particularly for new entrants who often find the current approach overly complex. However, for insurers, the Prudential Regulation Authority (PRA) would also need to simplify its authorisation processes for any real difference to be made, as the PRA is their lead regulator. Insurance intermediaries, however, stand to benefit from the FCA streamlining their processes and from the reduced reporting burden. It is also encouraging that consistently compliant firms may be rewarded with lighter-touch supervision.

2. Supporting sustainable economic growth:

• Strategy Focus: The FCA is striving for a more effective balance between consumer protection, market access, and innovation. They are also committed to a "tech-positive approach," demonstrated through initiatives like the creation of the digital securities sandbox. Building on the success of Open Banking, the FCA aims to introduce Open Finance. Open Banking enables the secure sharing of banking data with authorised third parties. Open Finance takes this a step further, expanding data sharing on a wider range of financial products, including insurance. This broader approach promises widespread innovation, lower costs, increased choice, and improved information for consumers, allowing for more holistic financial management.
• Work Programme Integration: The FCA's 2025/26 Annual Work Programme details key actions highly relevant to insurance, including:
  • Simplifying conduct requirements for commercial insurance businesses. The FCA published a consultation paper (CP25/12) in April 2025 proposing to remove certain reporting requirements.[1]
  • Accelerating digital innovation (e.g., considering new digital service standards like electronic verification of death to speed up bereavement claims, and reviewing GDPR barriers to AI).
  • Developing the Open Finance framework, with an initial focus on SME lending, which is relevant to insurance distribution.
  • Reducing regulatory burden by streamlining rules post-Consumer Duty.
  • Providing clarity on motor finance redress, with the ongoing review of historical motor finance commission arrangements and potential for an industry-wide redress scheme.

The simplification of commercial insurance rules is a welcome change, presenting a direct opportunity to reduce compliance costs. Digital innovation initiatives can significantly improve claims handling efficiency and the customer experience, particularly during a difficult time. Involvement in the Open Finance framework could unlock new data-sharing opportunities and foster innovative product development, especially in areas like embedded insurance. Given the possibility of an industry-wide redress scheme, insurers should continue to actively monitor and engage with the motor finance redress developments, alongside waiting for the imminent Supreme Court ruling.

3. Helping consumers navigate their financial lives:

• Strategy Focus: The FCA wants to expand access to financial support, driven by reforms including the advice/guidance boundary review, while deeply embedding the Consumer Duty across firms to foster genuine consumer confidence. The FCA recognises that regulation alone cannot dismantle systemic barriers and has committed to collaborating across government and industry to advance financial inclusion and capability, ensuring individuals and the broader economy reap the benefits of resilient, accessible financial services.
• Work Programme Integration: The programme places significant emphasis on embedding and enforcing the Consumer Duty. This includes proactive assessments of firms' implementation, focusing on outcomes, fair value assessments (especially in general insurance), tackling "sludge practices", ensuring better treatment of vulnerable customers, and progressing the Pure Protection Market Study. Claims handling remains a key focus area, with ongoing scrutiny of fair treatment and timeliness. The programme also highlights work on access to financial advice and guidance, including bringing "buy now pay later" products into regulation where relevant.

The FCA's continued focus on the Consumer Duty signals ongoing regulatory scrutiny for insurers in this area. Firms should ensure these principles are embedded across all products and customer journeys, with particular attention to claims management systems to ensure efficiency, fairness, and appropriate support for vulnerable claimants. Firms should expect further thematic reviews and targeted enforcement actions on Consumer Duty compliance within the insurance sector. Financial inclusion is another increasingly important area that the FCA expects insurers to prioritise.

4. Fighting financial crime:

• Strategy Focus: The FCA prioritises fighting financial crime by disrupting criminal activity by strengthening firms as a line of defence. Key intentions include supporting firms in adopting technology-led systems and controls to enhance their anti-crime measures. The FCA aims to empower consumers with tools and information to protect themselves from scams, particularly focusing on reducing investment and authorised push payment (APP) fraud. The FCA will also continue to emphasise collaboration with domestic and international partners to combat financial crime effectively.
• Work Programme Integration: The programme prioritises reducing and preventing financial crime. Key actions include:
  • Continuing the fight against APP fraud (relevant to insurance payouts).
  • Strengthening the Anti-Money Laundering (AML) framework, including proactive assessments of AML systems and controls for higher-risk firms.
  • Focusing on improving firms' systems and controls and leveraging technology for better detection.

Insurers face increasing FCA scrutiny regarding their AML controls and fraud prevention, especially in claims and APP fraud. Firms should therefore continue to strengthen their fraud detection systems, potentially leveraging new data-sharing initiatives and enhancing AML/Know Your Customer (KYC) processes. Additionally, firms should consider developing internal training to combat insurance-related fraud, such as application fraud and false claims, while also increasing customer awareness of 'ghost brokers' and policy/claims fronting.

Next Steps

The FCA's Strategy 2025-2030 and its related Annual Work Programme have a combined emphasis on innovation, sustainable growth, and operational efficiency which could present genuine opportunities for insurers to develop new products, expand into new markets, and streamline internal processes. While the FCA's strategy signals a welcome shift towards a more proportionate, simplified and growth-oriented regulatory tone, it is important to remember that the primary objectives remain unchanged.

A dominant theme within this framework is the rigorous enforcement of the Consumer Duty and Fair Value principles. Insurers should therefore continue to provide clear evidence of delivering positive customer outcomes, conduct thorough fair value assessments ensure effective management of vulnerable customers. The upcoming interim report on the Pure Protection Market Study will be a key area of focus. This study is expected to highlight fair value and commission payments, a notable development given that by the time the FCA publishes its findings, we are likely to have the Supreme Court decision in the motor finance test case. The market study will also represent the FCA's first in-depth examination of the distribution aspects of the Consumer Duty concerning in-scope products.

Boards and senior management of insurance firms should, therefore, diligently review the Strategy and Work Programme, ensuring their firms are not merely compliant but strategically aligned with the FCA's vision for the regulatory landscape.

¹ See also: The FCA Consults on Simplifying its Insurance Rules - 23 May 2025