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The Financial Conduct Authority (FCA) has unveiled an ambitious new initiative aimed at streamlining regulatory access for startups and accelerating the development of innovative financial products. As part of its 2025–2026 business plan, the FCA is reinforcing its commitment to becoming a smarter, innovation-driven regulator by enhancing its Regulatory Sandbox and expanding pre-application support services for firms entering the UK market.
Under the updated framework, every firm leveraging the FCA’s Regulatory Sandbox—a controlled environment for testing cutting-edge financial services—will now be assigned a dedicated authorisation case officer from the outset. This move is designed to accelerate time-to-market and ensure that regulatory requirements are clearly understood and efficiently met.
Since launching in 2016, the Regulatory Sandbox has supported 195 firms delivering innovative solutions to UK consumers. The expansion reflects the FCA’s growing focus on compliance automation, regulatory innovation, and supporting firms that integrate RegTech solutions into their offerings.
The FCA is also broadening its pre-application support service to now include wholesale, payments, and cryptoasset firms, providing these sectors with structured guidance as they seek regulatory approval. This strategic update is expected to improve compliance readiness, reduce approval bottlenecks, and foster a more inclusive financial ecosystem.
“We’re committed to being a smarter regulator—one that supports growth, helps consumers, and fights crime,” said Nikhil Rathi, Chief Executive of the FCA. “We’re going further to help firms enter the market with greater support and clearer processes to test innovative products.”
To further stimulate RegTech innovation, the FCA will also expand the work of its AI Lab, partnering with firms to explore AI-driven solutions and assess how artificial intelligence can enhance compliance management, risk assessment, and market competitiveness.
In a bid to build investor confidence, the regulator plans to proactively notify more applicants that it is ‘minded to approve’ their authorization, enabling these firms to attract investment while moving closer to full regulatory status.
On the consumer protection front, the FCA is introducing a new regulatory framework to formally include Buy Now, Pay Later (BNPL) products under its supervision. This change aims to ensure a balance between financial inclusion, innovation, and appropriate regulatory safeguards for users of BNPL services.
As part of its strategy to combat financial crime, the FCA is developing data-driven detection capabilities to improve identification and intervention, demonstrating a continued focus on regulatory intelligence and fraud detection.
Additionally, the FCA is proposing a modest 2.5% increase in minimum and flat rate fees to align with the expanding scope of its regulatory activities. At the same time, the agency is working to ease the data burden on firms by discontinuing three routine data returns, which will benefit an estimated 16,000 firms.
This progressive shift highlights the FCA’s evolving role as a forward-thinking regulatory body, fostering an ecosystem where Regulatory technology trends, compliance innovation, and responsible growth are central to financial sector transformation.
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