On 24th April 2025, the Financial Conduct Authority (FCA) announced a significant overhaul of its supervisory communications, aiming to simplify and modernise its engagement with regulated firms. This initiative is part of the FCA’s broader strategy to enhance regulatory efficiency and support the implementation of the Consumer Duty.
Key Changes to Supervisory Communications
1. Discontinuation of Portfolio Letters
Effective 30th April 2025, the FCA will cease issuing and publishing portfolio letters. These letters, traditionally tailored to specific firm types, outlined supervisory priorities and expectations. Their discontinuation marks a shift towards more streamlined communication methods.
2. Introduction of Market Reports
In place of portfolio letters, the FCA will introduce a limited number of market reports. These reports will encompass insights relevant to various firm types, derived from the FCA’s supervisory activities. The aim is to provide firms with consolidated, pertinent information to better understand regulatory expectations.
3. Archiving of Historical Communications
The FCA plans to retire historical portfolio letters and ‘Dear CEO’ letters, marking them as ‘historical’ and no longer current. While these documents will remain accessible, they will be clearly labelled to prevent confusion. Notably, ‘Dear CEO’ letters will continue to be used for addressing significant issues requiring senior management attention; for more information on this, please see our update published on 7th April 2025!
Rationale Behind the Changes
This initiative aligns with the FCA’s commitment to smarter, more effective regulation, as outlined in its 2025-2030 strategy. By streamlining supervisory communications, the FCA aims to reduce the regulatory burden on firms, enhance clarity, and support better consumer outcomes. The changes also reflect feedback from stakeholders seeking more accessible and relevant regulatory information.
Implications for Regulated Firms
Short-Term Actions:
Continue to reference existing portfolio and ‘Dear CEO’ letters until the new market reports are published later in 2025.
Long-Term Considerations:
Stay informed about the forthcoming market reports to understand the FCA’s supervisory focus areas.
Recognise that while historical communications will remain accessible, they may no longer reflect current regulatory priorities.
Anticipate a more consolidated approach to supervisory communications, potentially reducing the volume of documentation to review.
Final thoughts
The FCA’s move to simplify supervisory letters represents a significant step towards modernising regulatory communications. By replacing portfolio letters with concise market reports and archiving outdated documents, the FCA seeks to provide firms with clearer, more relevant information. This change underscores the regulator’s dedication to effective oversight and its responsiveness to industry feedback.
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With all the regulatory shifts on the horizon, now is the time to act. Don’t wait until compliance gaps appear; contact ALPH Legal today to ensure your firm is ahead of the curve. Whether you need tailored guidance, compliance support, or strategic insights to drive new business, our team will help you navigate FCA regulations with confidence.
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