As 2025 draws to a close, the direction of travel set by the FCA is becoming  much clearer. Through its business planning, policy statements, consultations and forward-looking initiatives, the regulator has laid the foundations for how it expects financial services to operate throughout the remainder of this decade. While none of this has arrived as a single announcement, and much of it being something of a slow burn, collectively it amounts to a material shift in how insurance intermediaries will be supervised in 2026 and beyond.

The FCA five-year direction is not about more rules; it is about different expectations; and for insurance intermediaries, 2025 has been the year in which that change has started to move from theory into practice.

Consumer outcomes, the organising principle

One of the clearest messages reinforced throughout this year is that, especially for those in the retail insurance market, consumer outcomes absolutely sit at the centre of the FCA’s regulatory model. The expectation is that the Consumer Duty is (and has been for some time) embedded, with all firms set up to effectively monitor the outcomes of their customers; it is the lens through which FCA supervision is increasingly carried out.

During 2025 the FCA has shown that it is willing to simplify insurance rules and remove older prescriptive requirements where it believes firms can be trusted to deliver good outcomes. That trust, however, is conditional. In 2026 and beyond, brokers should expect to be asked less about whether a process exists and more about whether it is being properly followed and whether it works in practice for customers, including those with characteristics of vulnerability.

Changing demographics including an ageing population and an increase in people facing financial hardship means that the FCA will continue to focus on how firms respond to vulnerability. The FCA’s 2024 Financial Lives Survey revealed that 49% of UK adults have one or more characteristics of vulnerability. Vulnerability is no longer a minority issue and must be recognised and addressed as a fundamental aspect of human experience, requiring an inclusive approach.

This means firms will need to demonstrate that they understand who their customers are, what good looks like for them, and how outcomes are monitored and improved over time. Evidence of fair value, appropriate distribution and effective support will matter more than tick box compliance.

Trust, conduct and culture

Another theme that became much more explicit in 2025 is the FCA’s focus on trust, conduct and culture. Through policy work on non-financial misconduct and repeated references to standards and confidence in the sector, the regulator has made clear that behaviour inside firms, by leaders and individuals, directly affects outcomes for consumers.

Looking ahead, insurance intermediaries should expect culture to remain a live supervisory issue. This is not about adopting new precepts or values statements; it is about whether firms can show that poor behaviour is challenged, that issues can be, and are, escalated appropriately, acted upon and that senior management set the right tone and are held to account where they do not.

Culture does not exist just on paper; it is embodied in what people say and do each day, particularly when they are not being watched. Time and again, conduct failings can be traced back to behaviours that were tolerated, excused or overlooked. Firms should aim to establish a culture of low tolerance for misconduct of any kind, making clear that behaviour matters as much as technical competence.

This requires firms to actively connect conduct expectations with HR practices, including recruitment, employee handbooks, performance management, disciplinary processes and whistleblowing, and to test whether these are aligned to good customer outcomes. The FCA has been explicit that poor personal conduct, even outside regulated activities, may be relevant to fitness and propriety, and from September 2026 the Conduct Rules will apply more broadly under COCON to serious matters of non-financial misconduct in the workplace as well as financial misconduct. This means culture will increasingly be judged by how consistently firms hold individuals to account, rather than by how well values are articulated.

Simplification

Reflecting on 2025, the FCA has made some tangible progress in simplifying parts of the regulatory framework, particularly for insurance. Changes introduced have given firms greater flexibility, including reducing duplication in product governance and fair value responsibilities where co-manufacturing arrangements exist, and allowing product review frequency to be set proportionately based on risk rather than strictly every twelve months. Alongside this, there have been changes to certain regulatory reporting requirements, which, while not strictly simplification in the purest sense, point to a regulator that is actively trying to reduce unnecessary burden and focus firms’ attention on what matters most, directing resources towards delivering good customer outcomes.

However, the trade-off is clear. As the FCA removes areas of detail and prescription, it expects firms to take greater responsibility for how they meet their regulatory objectives. In 2026 and beyond, insurance intermediaries will need to be comfortable explaining why their controls, governance and processes are appropriate for their business and customers. The question regulators are likely to ask is not whether a policy exists, but whether it is effective; thorough risk management processes are key to demonstrating this.

Growth and competitiveness

The FCA’s focus on growth and competitiveness has become more visible during the year, but with an important caveat. Alongside its messaging on high standards, firms have seen a more pragmatic approach at the authorisations gateway, with faster approvals and a clearer sense of momentum for well-prepared applications.

This reflects the FCA’s view that efficient regulatory processes can support growth without the need to lower the bar. The regulator has remained consistent in its position that strong standards underpin sustainable growth, signalling that speed at the gateway is conditional on clarity, quality and credibility rather than a relaxation of expectations.

Business plans and growth strategies for 2026 beyond will need to stand up to regulatory scrutiny. Expansion into new markets, products or distribution models should be accompanied by clear rationale, defined culture, and analysis of customer outcomes and risks.

The FCA’s message is that growth should not come at the expense of transparency, value or oversight. Firms that can show their growth benefits consumers are likely to be better placed in the years ahead.

Data, technology and regulatory maturity

Finally, 2025 has reinforced the FCA’s expectation that firms must use data and technology more effectively. Changes to regulatory reporting are part of a wider shift towards seeing data, and good management information (MI), as a core element of strong governance.

The FCA will increasingly expect firms to understand what their data says about customer behaviour, complaints, vulnerability and value; firms should expect questions about how they use data to feature more prominently in supervision. Intermediaries that invest in meaningful MI and use it to inform decisions, that are documented, will be better aligned to the regulator’s expectations.

The FCA has also made a strong commitment to fighting financial crime particularly in the areas of fraud, money laundering and sanctions evasion. The strategy for this includes increased supervision, more enforcement actions and a shift towards a data-led and intelligence driven approach with a clear expectation on firms to raise consumer awareness and demonstrate robust controls.

The FCA recognise that we are experiencing dramatic technological change, Artificial Intelligence could transform financial services and the FCA aim to support firms in leveraging technology to drive innovation, benefit consumers and markets and prevent financial crime, however the FCA are clear that the adoption of new technologies carries risk as well as benefits. The regulatory framework is technology agnostic meaning that firms embracing new technologies must do so in full compliance with their regulatory obligations.

What this means in practice

The FCA’s five-year direction is now easier to interpret. The regulator is offering more flexibility in how firms operate, but it is also raising expectations around accountability, judgement and outcomes.

For insurance intermediaries, the challenge for 2026 and beyond is to move away from viewing regulation as a technical exercise and towards embedding it into culture, governance, operations and everyday decision making. Those that do so will find the new regulatory environment more navigable; those that do not, may find that flexibility comes with uncomfortable scrutiny.

During the past year, the FCA has also become more visible and accessible to industry. There has been a noticeable strengthening of engagement with trade bodies and industry groups, alongside a greater presence at sector events, signalling a regulator that is more open to dialogue and practical discussion. This increased accessibility brings with it an expectation of reciprocity. Firms are likely to be expected to maintain open and constructive channels of communication with the regulator, in line with Principle 11, and to engage early and transparently where issues arise. For insurance brokers, this approach supports doing the right thing by the regulator, not through formality alone, but through timely, honest and well-informed engagement.

The message is clear; the FCA is changing how it regulates, and firms need to change how they engage and respond.

Do you need assistance navigating your FCA obligations with confidence?

Please get in touch if you have any queries on this topic, as always, UKGI is available to provide guidance and support.