The regulator based the fee allocation on the number of mortgage advice firms in the fee block, falling by 2% to 4,865, with a 2.7% fall in income to £2.1bn since 2025.
Further, the FCA has proposed increasing its minimum and flat fees for all firms by 1%, below the rate of inflation and the lowest increase since 2017/18.
Its annual funding requirement for 2026/27 is £788.9m, just 0.7% higher than the previous year, made up of ongoing projects and its ongoing regulatory activities (ORA) budget.
The regulator said this was the lowest increase to the annual funding requirement in over a decade.
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Streamlining regulation with AI
The FCA also revealed its plans for “smarter, more effective regulation” by using generative AI to “modernise regulation, streamline supervision and improve firms’ experience, by reducing unnecessary administrative burdens”.
Nikhil Rathi, chief executive of the FCA, said: “This year’s programme builds on our ongoing drive towards smarter, more data-driven regulation, helping us identify risks sooner, make faster, more consistent decisions and reduce unnecessary burdens on firms.
“We’re focused on helping consumers navigate their financial lives, reinforcing trust in financial services and supporting growth and competitiveness while keeping our fee increases low.”
The programme will involve integrating AI into regulatory workflows so the FCA can detect harm and speed up decision-making.
It will also use generative AI to review documents submitted by firms to make decisions faster. Once this has been successfully tested, the regulator will roll this out across authorisations and supervision.
It will utilise a new sandbox environment to test automated data feeds to reduce manual work, and invest in analytics and digital tools to enhance case handling.
Its Supercharged Sandbox will be expanded to allow more firms to test AI-driven financial products.
Further, it aims to reduce the burden on firms by removing three more regular data returns, and improve the regulation experience with faster authorisation, simplified digital forms and a scorecard to understand what firms need.
