FCA supervisory priorities Q1 2025: sector-by-sector summary
The FCA's supervisory engagement in Q1 2025 reflects priorities established in its 2024/25 Business Plan and shaped by emerging market developments. Cross-sector themes — Consumer Duty implementation quality, financial crime controls, operational resilience, and AI governance — feature across all sectors. However, each sector faces specific supervisory attention that firms should understand and use to calibrate their compliance programmes for the year ahead.
In retail investments and wealth management, the FCA's primary focus is on Consumer Duty implementation in the retirement income space. The regulator has indicated that it will conduct a targeted assessment of how wealth managers and platform operators are supporting clients approaching and in drawdown, with specific attention to the adequacy of guidance and advice, the suitability of default investment pathways, and the transparency of charges. Firms in this sector should review their retirement income proposition against the Consumer Duty outcomes, particularly the price and value and consumer support outcomes. The FCA has also flagged ongoing concern about the quality of suitability assessments for high-risk investments, following its earlier thematic review findings.
Wholesale markets supervision in Q1 2025 is focused on the quality of transaction reporting under UK MiFIR, following the FCA's data quality review findings published in 2024. Firms with persistent reporting errors have been placed on remediation programmes, and the FCA has indicated that it will take enforcement action where systemic reporting failures reflect inadequate systems and controls. Market abuse surveillance programmes are also under review, with the FCA paying particular attention to firms' use of technology for cross-asset and cross-venue surveillance. For asset managers, the FCA's ongoing assessment of liquidity risk management in open-ended funds — particularly those investing in less liquid assets — remains a priority following the industry-wide liquidity stress events of recent years.
In banking and payments, the FCA's supervisory focus includes APP fraud reimbursement compliance (following the mandatory reimbursement regime that came into force in October 2024), financial crime controls in challenger banks and fintech lenders, and the adequacy of capital buffers and stress testing for smaller deposit-takers. Insurance firms face continuing scrutiny on GWP pricing fairness following the pricing practices rules, with particular attention to add-on products and renewal pricing. The FCA is also conducting a review of the insurance distribution chain under Consumer Duty, focusing on how manufacturers are sharing value assessment information with distributors and how distributors are using it.
Supervisory engagement signals
Firms that receive information requests, Dear CEO letters, or invitations to participate in data collections in Q1 2025 should treat these as material supervisory signals rather than routine data exercises. The FCA's data-driven supervisory approach means that responses to information requests are compared against peer data and used to identify outliers. Firms should ensure that responses are accurate, complete, and prepared by individuals with adequate knowledge of the underlying compliance arrangements.