When you walk into the compliance department of a mid-sized financial firm in the City of London on any given Tuesday morning, the image that the word “compliance” conjures up is not entirely accurate. It’s not the calm, methodical setting where rulebooks are meticulously cross-referenced. It’s more akin to controlled chaos, with analysts sorting through lines of recordings of customer interactions, reviewers pointing out possible problems in a never-ending stack of paperwork, and a subliminal feeling that the entire operation is operating more quickly than it was intended to. This burden has long been borne by the financial sector in Britain. Now, the question is whether technology can make it lighter at last.
Just looking at the numbers, the picture is rather bleak. According to a PwC and TheCityUK report released in November 2025, end-to-end compliance expenses account for about 13% of a financial firm’s yearly operating costs, totaling about £33.9 billion for the sector. It’s not a rounding error. This is a structural issue that has been growing since the industry was hit by a wave of regulations after 2008 and has never truly subsided. The report’s presenter, Tessa Norman, pointed out something that is often overlooked in the headline numbers: the majority of businesses only track the expenses directly related to their compliance function, which means the actual end-to-end figure is most likely being understated. Put differently, £33.9 billion may be an optimistic estimate.
| Category | Details |
|---|---|
| Topic Focus | RegTech Adoption in UK Financial Services |
| Estimated Compliance Cost to UK Finance | £33.9 billion annually |
| Compliance as % of Operating Costs | ~13% of a firm’s annual operating costs |
| Key Regulatory Body | Financial Conduct Authority (FCA) |
| Key Government Initiative | HM Treasury’s Financial Services Growth & Competitiveness Strategy |
| Chancellor | Rachel Reeves, HM Treasury |
| Key RegTech Growth Projection | ~30% rise in RegTech solutions adoption |
| Key Reform Packages | Edinburgh Reforms, Mansion House Reforms, Leeds Reforms |
| Notable RegTech Firms | Recordsure, REG Technologies, Confluence Technologies |
| Reference Website | fca.org.uk |
The emergence of regulatory technology, or RegTech, at a scale that is beginning to yield noticeable results is what has recently changed and what truly sets this moment apart from earlier discussions about compliance efficiency. RegTech adoption was sluggish, skeptical, and uneven for years as technology vendors promoted it as the solution to compliance’s cost issue. Systems from the past were too deeply ingrained. There was not enough risk appetite. Businesses had been burned too many times by unfulfilled technology promises to approach the next wave with any kind of enthusiasm. Although it hasn’t entirely vanished, that hesitancy is diminishing.
By referring to the financial industry as “the crown jewel in our economy” and stating unequivocally that post-crisis regulation went too far in attempting to eradicate risk-taking, Chancellor Rachel Reeves has provided some political tailwind. Her Treasury recommendations to the FCA called for sensible, practical regulation that permits businesses to expand, innovate, and compete. It’s still unclear whether the FCA will make a significant change in response. The regulator’s response to Reeves was noticeably measured, highlighting growth initiatives that were already in progress while omitting to state that it required guidance from Westminster. There seems to be some degree of cautious positioning on both sides of the Treasury-FCA relationship. However, compliance departments have begun to pay attention because the directional signal is sufficiently clear.
The actual technology has advanced considerably. Monitoring consumer conversations is one of the most practical uses, and it shows exactly why previous approaches were not working. In the past, companies that reviewed audio recordings for compliance had to deal with a difficult math problem: it took about three hours to manually review each hour of recorded customer interaction. Meaningful review was practically impossible given the volume of daily customer contact at any institution of significant size. The majority of businesses chose to sample less than 5% of all interactions in the hopes that systemic issues would emerge in that tiny portion. Often, they didn’t. Everyone was aware of the substantial regulatory, operational, and reputational exposure this produced. These days, AI-driven tools alter that equation by processing interaction data at scale, identifying real risk cases, and allowing review teams to concentrate their efforts where they are truly needed rather than in random sampling in the hopes of finding needles in haystacks.
The CEO of Recordsure, Joe Norburn, articulated this change in a way that is worth considering: compliance, which was once thought of as a straitjacket, is changing. What’s developing on the other side of that transition is the more fascinating observation. It turns out that customer interaction data, which compliance teams have always had to handle, contains actually useful business intelligenceSavision delivers new multi-platform business service intelligence solution about customer needs, service gaps, and friction points. Compliance ceases to be merely a cost center and begins producing insights that sales, service, and training departments can genuinely utilize when AI enables systematic analysis of that data instead of manual sampling. It’s possible that the broader business intelligence dividend—rather than just the compliance savings—is what persuades doubtful CFOs to approve RegTech investment.
The experience of CNA Hardy provides a helpful example at the ground level. The company’s Head of Distribution, Sales, and Marketing, Andy Clements, explained how RegTech adoption significantly increased broker onboarding efficiency. However, he pointed out that the time saved wasn’t just recorded as a cost savings. It was put back into more direct communication with clients and brokers. That’s a different kind of result than the efficiency story typically conveys, and senior leadership will likely find it more convincing than a spreadsheet that shows the compliance team’s headcount has decreased.
Both sides of the adoption debate are under more pressure because of the regulatory environment. Together with its Australian counterpart ASIC, the FCA has been indicating that regulators will increasingly question businesses about why they aren’t utilizing the tools that are available to help with compliance. That represents a significant change in the supervisory stance. Adoption of RegTech was practically optional for years. That might be evolving. Regardless of the growth agenda coming from Westminster, businesses still navigating Brexit-related regulatory transitions—such as the FCA’s ongoing replacement of EU-derived rules across MiFID, PRIIPs, Securitization, and other frameworks—face a compliance workload that isn’t decreasing.
It’s difficult to ignore the fact that this specific moment offers a real opportunity that previous discussions about RegTech never quite had. Cost-cutting measures are under political pressure. Adoption of technology is encouraged by regulations. There is technology that has been shown to be effective. Additionally, there is mounting evidence that the investment yields returns that go beyond simple compliance savings, including from companies like CNA Hardy, new data on AI-driven monitoring tools, and the FCA’s own public recognition of the efficiency case. 2025 and 2026 will probably provide an answer to the question of whether the industry as a whole advances decisively or keeps moving slowly. Everything is in its proper place. For the time being, it is still genuinely unclear if they will come together fast enough to significantly reduce that £33.9 billion figure.
