After promoting its new approach to communicating with sectors for several months, the FCA published its first Regulatory Priorities report in February. The first report focuses on the insurance sector and sets out the work the FCA has undertaken in the market, the priorities it has identified, the activity it plans to carry out during the year – and crucially, what it expects firms to do in response.
Overall, the nine Regulatory Priorities reports are clearly intended to become the FCA’s central annual communication to sectors. Firms should therefore treat them as a key regulatory publication and ensure they review the report relevant to their sector. In particular, the sections outlining “What we expect firms to do” require closer scrutiny. Firms are to assess objectively whether their current practices meet the FCA’s expectations and standards. Where gaps do exist, firms will need to consider how they address them and ensure appropriate action is taken.
Focus on consumer investments
In its report covering the consumer investments sector, published on 4th March, the FCA outlines four strategic priorities: building a stronger investment culture, strengthening trust, securing good consumer outcomes and strengthening financial crime controls. These priorities sit within the FCA’s wider regulatory strategy and signal where supervisory attention is likely to focus over the coming year.
The importance of the report was reinforced by Lucy Castledine, Director of Consumer Investments at the FCA, during her keynote speech at The Investing and Saving Alliance (TISA) Inclusive Investing Conference. In her remarks, she confirmed that the priorities set out in the report underpin the FCA’s overarching strategic objectives and that “the report should act as a guide for firms’ boards and chief executives.”
Where firms identify areas requiring improvement, it may not be possible to improve everything immediately. However, firms should develop a structured action plan that has been reviewed and approved at an appropriate governance level. This plan should include clear timelines, defined deliverables and accountable owners for each action.
Across the four priorities, the FCA outlines 11 specific expectations for firms. While each warrants attention, two stand out as particularly significant.
Demonstrating fair value through a clear assessment of costs and benefits
The FCA recently confirmed that it is investigating a number of firms for potential breaches of fair value requirements. With the regulator now reiterating its expectations in the Regulatory Priorities report, firms should review how they assess the value of their products and services.
Fair value remains a core component of the Consumer Duty framework, as Lucy Castledine highlighted in her speech at the Personal Investment Management and Financial Advice Association (PIMFA) conference last year. Firms should therefore ensure their fair value assessments are comprehensive, well-documented and regularly reviewed.
Designing products and services that meet consumer needs
Another area of focus is product design and distribution. Firms should have clearly defined target markets for their products and services and maintain effective processes to ensure distribution remains aligned with those markets.
This analysis must also consider customers in vulnerable circumstances. Firms should be able to demonstrate that vulnerability considerations have been incorporated into product design, distribution strategies and ongoing monitoring.
Ongoing regulatory themes
Monitoring outcomes and producing meaningful management information (MI)
The FCA continues to highlight the importance of outcomes monitoring. Firms need to generate meaningful MI that enables them to assess whether customers are receiving products and services that are appropriate for their needs and delivering the intended outcomes.
Effective outcomes monitoring is central to demonstrating compliance with regulatory expectations and identifying issues before they become supervisory concerns.
Follow-up on ongoing advice services
Another notable feature of the report is the FCA’s timeline of key supervisory activity. The regulator confirms that it will undertake follow-up work on ongoing advice services in the first half of the year, asking firms to outline the steps they have taken since the publication of its February 2025 paper on the topic. Any organisation that has not yet conducted a review of its ongoing advice services against the FCA’s findings should treat this as a priority.
Why independent challenge matters
Understanding the Regulatory Priorities is only the first step. Firms must also ensure their governance, product frameworks and monitoring processes align with the FCA’s expectations.
At Momenta, we support firms with regulatory gap analysis, Consumer Duty adherence and outcomes-monitoring frameworks, helping organisations assess where they stand against the FCA’s expectations and develop practical next steps.
If you would like to discuss how the FCA’s Regulatory Priorities may impact your firm, get in touch with our regulatory experts to explore how we can support you.
