Part 2: Regulatory expectations: What the FCA requires in 2025

The FCA’s regulatory approach is becoming more stringent, and 2025 is already seeing even greater demands on firms. With the shift towards outcomes-based regulation, the FCA is not just checking whether firms have policies and processes in place, it expects firms to prove, with robust evidence, that they are consistently delivering good customer outcomes.

Late last year, the FCA outlined several key regulatory expectations, which are shaping the compliance landscape for financial advisory firms. For DA firms, these requirements mean significant investment in compliance infrastructure, technology and expertise, something that smaller firms may struggle to manage effectively.

• Enhanced scrutiny: The FCA will employ a more data-driven approach, requiring firms to provide comprehensive evidence of compliance and good customer outcomes.
• Proactive compliance: Firms must not only adhere to existing regulations but also anticipate and adapt to regulatory changes promptly.
• Potential sanctions: Non-compliance can lead to severe consequences. The regulator has stated that it is less focused on issuing fines and more focused on using enforcement powers to force firms into compliance. The FCA is taking more intrusive and direct action, such as:
  • Requiring firms to undergo skilled person reviews (Section 166 reviews) which can cost over £100,000 per review.
  • Placing firms under heightened regulatory supervision, requiring them to report more frequently and restrict certain activities.
  • Revoking authorisation for firms that fail to demonstrate compliance.

These heightened expectations necessitate a significant investment in compliance infrastructure and expertise which isn’t easy to come by. In layman’s terms, there is no room for error. And with there being fewer firms becoming directly authorised, there is nowhere to hide either. The FCA has made it crystal clear that they will impose sanctions on any firm that is not following the rules and that they have the time to go through each firm with a fine-tooth comb.

To meet compliance requirements and deliver a high-quality client experience, financial advice firms must invest in key technologies that support regulatory adherence, operational efficiency and client engagement. These tools are now more essential than ever, given the FCA's increasing focus on data, Consumer Duty and financial resilience.

The must-have technology solutions include:

Back-office technology: Systems such as Intelliflo Office acts as the operational hub for financial firms and helps manage client relationships, compliance records and business processes efficiently. Investing in a good back-office system ensures that firms meet the FCA reporting requirements with accurate data.

Client reporting tools: The FCA expects firms to provide clear, transparent reporting to clients. Utilising client reporting tools such as FE Analytics or Voyant helps firms to demonstrate their value for money, a key part of Consumer Duty.

Cashflow modelling tools: The FCA expects firms to assess the sustainability of retirement income (especially in the at-retirement advice space). Cashflow modelling tools such as CashCalc and Voyant helps advisers to visualise long-term financial plans for clients which provides evidence that suitability assessments are well-structured.

Risk profiling software: Software such as EValue ensures that client investments match their risk appetite and objectives. This helps firms to prove suitability and meet FCA suitability requirements. It is important that the software that you choose is compatible with the back-office technology and cashflow tools so that there are clear audit trails to meet FCA requirements.

Document storage & GDPR-compliant systems: The FCA requires firms to keep secure, auditable client records and GDPR mandates proper storage and management of personal data. This protects firms from data breaches, regulatory fines, and client disputes.

The network advantage

By joining a network, firms gain access to a centralised compliance framework that ensures they meet the FCA’s data requirements without the need for significant in-house investment.

Access to industry-leading technology (at a lower cost)

At the ASHL Group we have centralised compliance systems that track and report regulatory data on behalf of member firms. Automated MI reporting ensures that firms can instantly access the compliance data the FCA requires. Any regulatory requests are handled by our expert compliance teams on behalf of our member firms, reducing the burden on individual firms.

For a DA firm, the cost of implementing these measures alone can be tens of thousands of pounds per year. By joining a network, advisers gain access to this infrastructure at a fraction of the cost, allowing them to focus on serving their clients rather than worrying about regulatory demands.

As a member of the ASHL Group you will also benefit from a dedicated Intelliflo Office (iO) support and data migration team who are on hand to conduct bespoke training tailored to your experience level alongside and furthermore support with any queries in addition to your T&C supervisor.

Ongoing support and regulatory framework

We provide our members with the ongoing regulatory support and governance framework that firms need to stay ahead of compliance requirements. A key benefit of joining a network is that we have dedicated regulatory specialists who monitor FCA updates and ensure member firms remain compliant. When we become aware of new policies, we create pre-approved compliance policies that are automatically updated in line with new FCA requirements that you can use. Furthermore, we offer specialised training and CPD sessions ensuring that advisers stay up to date with changing regulations.

Rather than spending valuable time and resources trying to interpret and implement regulatory changes, firms in a network can rely on centralised compliance support to keep them compliant. This removes a huge operational and financial burden and allows advisers to focus on their core business.

Aside from the technical support, you will receive regular, tailored 1:1 reviews and audits conducted by your dedicated T&C supervisor which will give you the reassurance that you can concentrate on delivering high quality advice.

Summary

The 2025 regulatory landscape is far more challenging than in previous years. The FCA’s focus on enhanced scrutiny, proactive compliance and tougher enforcement measures means that DA firms must make significant investments in compliance expertise, technology and governance.

For many firms, meeting these demands alone is unsustainable as the financial and operational burden of maintaining compliance under the FCA’s new expectations is simply too high.

In the next blog, we move away from the compliance aspects and begin to focus on business growth and development.

If you’re ready to check out the range of benefits on offer as a Sense or Lyncombe member, take a look at our network services and benefits brochures below.

Lyncombe Consultants services and benefits brochure

Sense Network services and benefits brochure