Stay in the know: Receive our newsletters, reports and event invitations straight to your inbox.

Sign up to our mailing list
Become a member Search
Search
Close
View all our work
Long term competitiveness

Reducing the cost of compliance: Unlocking efficiency, competitiveness and growth for the UK financial services sector

05 November 2025
5 minutes
Read the full report: Download the full report: (PDF)
More Information
Read the full report: Download the full report: (PDF)

In association with: 

Our 'Reducing the cost of compliance' report, in association with PwC UK, examines the rising cost of regulatory compliance in the UK's financial services sector. The report draws on interviews with Chief Compliance Officers (CCOs) and senior compliance professionals across UK financial services firms.

It highlights that 84% of compliance leaders have seen costs increase over the past five years, with total regulatory compliance estimated at over 13% of operating costs, amounting to approximately £33.9bn annually for the largest firms.

The report identifies complex regulations, lack of standard measurement frameworks, and operational challenges as key drivers of these costs. It outlines opportunities for both regulators and financial services firms to streamline and simplify compliance processes, leverage technology such as AI, and align efforts towards competitiveness and growth. The report sets out practical recommendations to help reduce compliance burdens while maintaining robust risk management, aiming to make the UK a more attractive destination for investment and innovation.

Three key principles to develop the UK’s regulatory framework and summary of recommendations for regulators

A more accessible and proportionate regulatory framework

• Review rulebooks systematically to reduce complexity, duplication and outdated requirements.

• Fundamentally review requirements for wholesale firms to ensure proportionality and bolster the UK’s competitiveness.

• Take a more proportionate approach for non-systemically important investment firms.

• Provide early clarity on the scope of regulation, and on key areas of ambiguity under principles based regulation.

• Strengthen cost benefit analysis, including cumulative impact assessment and post-implementation reviews.

A smarter, more supportive supervisory approach

• Embed proportionality in day-to-day supervision.

• Clarify the FCA’s new flexible and less intensive supervisory model, with a clear framework for measuring what constitutes ‘doing the right thing’.

• Strengthen supervisory continuity, expertise and resourcing.

• Coordinate and streamline supervisory requests across the FCA and PRA.

Embracing technology and data analytics

• Deliver the FCA’s machine-readable Handbook at pace.

• Further modernise data collection and analytics.

• Support industry adoption of shared utilities (e.g. KYC and reporting) by setting standards and convening stakeholders.

Three key recommendations to help financial services firms reduce the cost of regulatory compliance

Adopt a holistic approach to compliance cost optimisation:

Address cost drivers across all three lines of defence using an integrated framework that promotes simplification, digitisation, better data, and stronger first-line ownership of risk.

Embed a business case mindset and measure tangible change:

Treat compliance transformation as an enablement strategy, focusing on long-term efficiency, cultural improvement, and decision-making agility, not just cost reduction. Define quantitative and qualitative Key performance Indicators (KPIs) to measure and track success against objectives, as part of a pragmatic and prioritised roadmap for change.

Leverage AI and technology strategically:

Develop a digitisation strategy focused on enterprise-wide adoption of AI (with compliance as the pioneer for driving AI adoption and digitisation through use cases with unstructured data that do not drive high risk exposure to customer data), and develop a codified compliance and risk capability to manage AI agents effectively.

Find out more and read the full report using the buttons below:

Read the full report: Download the full report:
You might also be interested in
Our submission to the Autumn Budget 2025

Read our submission to the government ahead of the 2025 Autumn Budget. In it we highlight policy areas where the Budget could deliver positive change for our industry and the wider economy.