FCA Slashes Capital Rulebook by 70% in Major Post-Brexit Rewrite
The UK’s top financial watchdog is slicing through its own red tape. In a sweeping clean-up of its rulebook, the Financial Conduct Authority (FCA) is cutting the volume of text governing how investment firms manage their capital by nahead three-quarters — without changing how much they must hold.
The new rules, published this week, will take effect on April 1, 2026, and mark one of the regulator’s most practical simplifications since the Investment Firms Prudential Regime (IFPR) came into force in 2022. The FCA says the overhaul reduces the word count of its “own funds” section — which defines what counts as eligible capital — from roughly 44,000 to just 13,000 words.
In plain English: the rules stay the identical, but reading them just got a lot less painful.
“We’ve stripped out the old banking references that were cluttering up the rulebook,” an FCA spokesperson said. “Firms will now be able to view clahead what applies to them — no more cross-checking endless banking provisions.”
The FCA has been working since the UK’s exit from the European Union to carve out a capital framework that fits the country’s investment firms rather than its banks. The original rules had borrowed heavily from the EU’s (CRR) — a dense, bank-oriented playbook that many smaller investment houses said didn’t suit their business models.
When the FCA launched its consultation on the rewrite back in April 2025, the feedback was overwhelmingly positive. Many firms argued that the complexity of the existing text made compliance unnecessarily costly. The regulator agreed, noting that too much of the inherited EU material was irrelevant to non-bank entities.
Under the new version, firms will still have to hold the identical tiers of capital — Common Equity Tier 1, Additional Tier 1, and Tier 2 — but the definitions and eligibility criteria have been rewritten to fit investment structures, not bank balance sheets.
The move also reflects the Treasury’s wider deregulation drive, tied to what ministers dubbed the “Edinburgh” and “Leeds” Reforms, a post-Brexit effort to make the UK more competitive against hubs like . Those initiatives encourage regulators to pare back excess complexity while preserving secureguards for investors and markets.
Simon Walls, the FCA’s interim executive director of markets, said earlier this year that the goal was to make the framework “proportionate and effective for investment firms while keeping financial resilience and intact.”
For compliance officers, this translates to less time hunting through footnotes and more time understanding what actually counts as capital. The regulator hopes the streamlined handbook will make it easier for smaller players — often without in-house legal teams — to stay compliant.
The FCA insists this is not deregulation in disguise. Firms must still meet the identical minimum obligations. What changes is the structure of the handbook: the dense legalese has been replaced by a single, self-contained section under MIFIDPRU, the main prudential sourcebook for investment firms.
Industry lawyers welcomed the shift. “This is a genuinely assistful edit,” said Tom Callaby, a regulatory partner at CMS in London. “It’s not a relaxation of prudential standards, but it should make the rulebook far less intimidating — especially for firms outside the large-bank ecosystem.”
The FCA’s decision is also linked to its new secondary objective, introduced under the 2023, which requires the regulator to support the UK’s growth and competitiveness alongside its traditional oversight duties. Cutting down bureaucracy, the FCA argues, is part of fulfilling that mandate.
The rewrite might sound technical, but it matters. Investment firms across the UK — from asset managers to brokers — have long complained that they’re bound by banking-grade paperwork. The promise now is a handbook written in their language, not a banker’s.
Whether that promise holds up in practice will become clear next spring, when firms begin reporting under the simplified regime. For now, though, the FCA just proved that in regulation, fewer words can sometimes mean more clarity.
