English 
Spanish 
French 
Critical Insights for Sustainability (ESG) Professionals
The UK Financial Conduct Authority (FCA) is entering a period of significant transformation, marked by strategic leadership appointments, bold regulatory reforms, and a renewed focus on growth, innovation, and consumer protection. As the financial landscape evolves in complexity and competition, the FCA’s actions signal its commitment to ensuring a balanced, forward-looking, and responsive regulatory framework.
Strengthening Governance: New Board Appointments
In a move underscoring the importance of experienced oversight, the Chancellor of the Exchequer, Rachel Reeves, has announced the appointment of four new Non-Executive Directors to the FCA Board.
Julia Black, a distinguished legal academic and former External Member of the Prudential Regulation Committee, brings deep regulatory expertise. Anita Kimber, a seasoned transformation leader with prior roles at EY, PwC, IBM, and Nationwide, offers rich insight into compliance, technology, and data strategy. John Ball, a pensions expert and former Global Managing Director at Willis Towers Watson, enhances the Board’s strategic governance and change management capabilities. Stéphane Malrait, with extensive global experience in market structure and innovation at ING Bank, strengthens the FCA’s focus on fintech and global competitiveness.
Additionally, Richard Lloyd—a consumer champion and former interim Chair of the FCA—has received a one-year extension on his term, now set to end in March 2026. Together, these leaders are expected to support the FCA in executing its ambitious five-year strategy.
A Supervisory Shift: Addressing High-Risk Products and Governance in Smaller Firms
In its recent review of 410 smaller asset managers and alternatives firms, the FCA identified several concerns:
- Inadequate compliance with Consumer Duty: Some firms lag in implementing rules designed to ensure fair treatment of consumers and the delivery of good outcomes.
- Governance gaps and conflicts of interest: Especially where senior staff hold multiple roles, oversight suffers.
- Improper handling of high-risk products: Leveraged derivatives such as CFDs are often sold without sufficient checks on client suitability.
This review forms part of a broader supervisory strategy initiated in 2022, which prioritizes consumer protection, market integrity, and responsible competition.
Modernising Mortgages: A More Permissive and Innovative Framework
As part of its plan to boost long-term economic growth, the FCA is rethinking the UK’s mortgage rules. With a market worth over £235 billion, the FCA seeks to make mortgage access faster, simpler, and more affordable.
Speaking at a recent conference, Emad Aladhal, FCA’s Director of Retail Banking, criticised the UK’s overly cautious lending culture. He noted that while 99% of mortgages since 2014 are on track, this ultra-prudence may exclude creditworthy individuals from homeownership—ultimately harming societal well-being.
The FCA’s forthcoming consultation paper will explore:
- Alternative affordability testing models
- Risk appetite in mortgage lending
- Support for lending in later life
- Enhancing innovation while keeping affordability front and centre
Industry leaders, like Sarah Brown from Coventry Building Society, have expressed cautious optimism, stressing that any innovation must still prioritize the financial stability and well-being of customers.
Enhancing Research Access: The Return of Bundling
In another pro-growth move, the FCA has reversed its prior stance on research unbundling for investment funds. Under new rules:
- Fund managers may now bundle investment research costs with trade execution, aligning the UK with international practices.
- This flexibility aims to boost research access, especially for smaller firms, and enhance global competitiveness.
However, the FCA is also implementing guardrails to ensure investor protection and transparency remain intact.
Tech and Payments Innovation: AI Testing and PASS Launch
In a future-facing initiative, the FCA is:
- Introducing AI Live Testing to guide the responsible use of artificial intelligence in consumer financial services.
- Launching the Pre-Application Support Service (PASS) to streamline onboarding for crypto, payment, and wholesale firms.
These steps signal a strong commitment to supporting innovation while safeguarding consumers and market stability.
Leadership in Payments: David Geale Takes the Helm
David Geale has been appointed as the new Executive Director for Payments and Digital Finance, and Managing Director of the Payment Systems Regulator (PSR), now integrated within the FCA. With decades of policy and supervisory experience—including during Brexit and in cryptoasset regulation—Geale’s leadership is expected to strengthen the FCA’s oversight of digital finance.
ESG Implications for Sustainability (ESG) Professionals
For sustainability and ESG professionals, the FCA’s evolving regulatory framework provides both opportunity and responsibility. Key points to be vigilant about include:
- Avoiding ESG mislabeling and greenwashing in marketing and disclosures
- Demonstrating robust ESG data governance and methodology transparency
- Ensuring that ESG considerations are embedded in board oversight, product design, and risk management, not siloed or superficial
- Being proactive about regulatory expectations around environmental risks, such as climate scenario testing or transition risk disclosure
The FCA is reshaping itself to meet modern financial challenges head-on. Whether through reforming legacy mortgage rules, enhancing oversight of high-risk investments, welcoming strategic leaders, or embracing technology and innovation, the regulator is positioning itself as both a guardian of consumer trust and a catalyst for financial sector growth.
The FCA aims to ensure UK financial markets not only function well but also thrive in a competitive, consumer-centric, and innovation-friendly environment.
Attend our upcoming Europe | Certified Sustainability (ESG) Practitioner Program, Advanced Edition 2025, on June 25-26 & 27 to stay ahead of evolving UK regulatory expectations, as the FCA intensifies its focus on ESG transparency, governance, and anti-greenwashing measures. Lead ESG integration with credibility and compliance.
