UK FCA backs FinTech growth without diluting compliance

By Vriti Gothi

Recent signals from the UK’s Financial Conduct Authority (FCA) suggesting a more supportive regulatory approach for FinTech firms have been welcomed by the sector, as the government seeks to reinforce the country’s position as a global financial hub. However, industry experts caution that easing early-stage compliance burdens should not be interpreted as a relaxation of standards.

The UK government has made attracting and retaining FinTech businesses a strategic priority, particularly amid heightened global competition from jurisdictions across Europe, Asia and the Middle East. In this context, regulatory clarity and proportional oversight are increasingly viewed as competitive differentiators.

Becki LaPorte, Principal – AML Strategy and Innovation at FinScan, said, “For any company to thrive, it needs a supportive and sensible regulatory environment that encourages growth. As such, the signals being sent by the FCA to FinTech firms are encouraging and may lead to more firms setting up their base in the UK. Achieving this is a strategic priority for the UK government.  However, companies choosing to do so need to understand the changes and the intent behind them. Reduced compliance requirements at an early stage to promote growth and innovation should not equate to loose or inadequate controls. It is not a choice between one and the other.”

However, LaPorte stressed that firms must carefully interpret the intent behind regulatory adjustments designed to foster innovation. While reduced compliance requirements at an early stage can lower barriers to entry, she warned against conflating proportionality with permissiveness.

LaPorte stressed, “In terms of best practice, compliance standards should always be beyond the bare minimum required by the regulation. The bare minimum creates a solid foundation, but additional controls and procedures should be implemented based on a company’s business model and risk tolerance.  Like any part of a fast-growing business, compliance needs to be scalable. As the firm grows, the policies and procedures need to grow and evolve with it.”

The distinction is particularly relevant in areas such as anti-money laundering (AML), where regulatory scrutiny remains high despite broader efforts to streamline supervisory frameworks. Industry observers note that reputational and enforcement risks can escalate quickly for early-stage firms that underinvest in governance and risk management.

She also emphasised the importance of scalability. As FinTechs grow, expanding customer bases, entering new markets, or adding products, their risk exposure evolves. Compliance frameworks must be designed with that trajectory in mind.

Engagement with regulators from an early stage is another critical component, she added. Proactive dialogue can clarify expectations and reduce the risk of misalignment.

As the UK recalibrates its regulatory posture to remain competitive, the balance between fostering innovation and safeguarding financial integrity will remain central. For FinTech firms, the message appears clear: regulatory flexibility may support growth, but sustained success will depend on embedding robust, forward-looking compliance frameworks from the outset.