The priority research questions shaping our work, and where we want to collaborate and build evidence with you.
Kate Collyer
Foreword by Kate Collyer, FCA chief economist
Financial markets are changing rapidly and in interconnected ways. New technologies are reshaping how consumers borrow, save, invest and engage with financial services, while demographic change is influencing savings, investment and retirement outcomes. At the same time, pressures on household finances are evolving alongside wider structural shifts in the economy, affecting consumer needs, resilience and institutional trust. Understanding these dynamics – and getting ahead of them – is central to how we deliver our strategic outcomes, and support good results for consumers, markets and growth.
The FCA’s strategy for 2025 to 2030[1] sets out a vision to deepen trust, rebalance risk, support growth and improve lives. It is underpinned by four priorities: being a smarter regulator, supporting sustained economic growth, helping consumers navigate their financial lives and fighting financial crime. Delivering against these priorities requires strong evidence, analytical openness and a clear understanding of changing markets.
This Areas of Research Interest paper contributes to that ambition. While we already have analysis and understanding for many of the areas covered, the questions are designed to address topics – many of them difficult – where analytical issues remain open, and where bringing fresh data, methods and perspectives to bear can make a real difference. We are sharing our interests with academics, researchers, industry analysts, civil society organisations, and peers across the wider regulatory community to encourage communication and alignment. At times, we hope this will lead to active collaboration.
This document sits alongside other Areas of Research Interest (ARI) documents published by HM Treasury, DBT, the PRA, the Bank of England, and other parts of the wider regulatory ecosystem.
The list is deliberately broad, but it is not exhaustive. Our areas of research interest will continue to evolve as markets change, as new evidence emerges, and as we learn from our own work and from the work this document helps to spark. We expect to revisit it, and we welcome views on where we should sharpen, expand or reframe our focus.
If you are working on research that speaks to one or more of these questions, we would very much like to hear from you – whether you are an academic, data scientist, technologist, behavioural scientist, social scientist, policy analyst or researcher from any discipline engaged with financial services.
We hope this marks the beginning of many fruitful exchanges.
Introduction
Our research questions are organised around four themes: growth, wholesale markets, helping consumers, and regulation – each aligned with FCA’s strategic priorities. Questions relating to financial crime thread across all four areas rather than being grouped on their own.
There is intentional overlap across these questions. Financial markets do not operate in silos, and neither should analysis. We are interested in exploring those interdependencies, where understanding one question deepens our grasp of another.
Aside from the regulation theme, the questions are primarily concerned with the world outside the FCA. Nonetheless, an interest in how we might influence, or be influenced, by any of these elements should be read as implicit.
We have chosen to keep questions focused enough to be researchable, while broad enough not to dictate methods or hypothesise.
Our research themes
Growth
Financial sector performance – and how it supports productivity, competitiveness, and long-term prosperity in the UK.
Wholesale markets
The functioning, resilience, and integrity of UK wholesale financial markets – and how they support capital allocation and real economy growth.
Helping consumers
How consumers navigate their financial lives, the fairness and effectiveness of markets in supporting good outcomes, and the implications for trust and resilience.
Regulation
How can the FCA design and deliver regulation that is proportionate, effective and responsive to rapidly changing financial markets.
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Growth
Financial services account for almost 10% of the UK economy. They also determine how effectively capital is channelled into investments, how risks are priced and shared, and how confidently households and firms can plan, spend and grow. How well the sector performs, and implicitly how regulation shapes that performance, has direct consequences for innovation, productivity, and the UK's long-term prosperity.
Sharpening our understanding of these channels – between regulation, financial sector performance, and economy-wide growth – has become central to our work, particularly under our secondary international competitiveness and growth objective introduced by FSMA 2023.
The theme is organised around three focus areas: productivity in the financial sector, the international competitiveness of UK financial services, and how the sector supports productivity and growth across the wider economy. Our objective is to strengthen the evidence base on the channels linking regulation, financial sector performance, and growth, so that regulatory choices are grounded in the best available understanding of their wider effects.
This section builds on The Growth Gap[2], our literature review published in 2024.
Focus areas
Changes in financial services markets: Productivity growth
How effectively financial services firms use labour, capital and technology to deliver financial services. We are interested in how regulatory efficiency, innovation, competitive dynamics, and regulation design impact financial services.
Changes in financial services markets: International competitiveness
The ability of UK financial services firms to compete globally and the attractiveness of the UK as a place to invest and do business. We want to understand what drives firms’ decisions to locate, invest, and expand in the UK (including reducing trade barriers, leading on international standards and regulatory environment relative to other jurisdictions).
Change in UK economy: Capital allocation and consumers
How financial services can support growth by improving firms' access to finance, enabling capital flow to the most productive uses, and empowering consumers to work, save, invest and spend. We are interested in the effectiveness of these channels, the role regulation plays in either enabling or constraining them, and how risks can be allocated efficiently and mitigated.
Change in financial services markets: Productivity growth
- Productivity: What explains the decline in productivity growth in UK financial services (domestic and export-oriented) after the global financial crisis, and what lessons does this offer for future productivity growth? What role do data and measurement challenges play in explaining observed productivity trends?
- Innovation: How can innovation in UK financial services be measured, and what factors drive differences in innovation across firms, products and over time?
- Competition: How do changes in the intensity and nature of competition across financial services markets and products affect outcomes for consumers, firms and market functioning, including any positive or negative externalities? What factors drive these patterns of competition?
Change in financial services markets: International competitiveness
- Regulatory competition: How do differences in regulation and financial services infrastructure across countries shape the international competitiveness of UK financial services, and how does the UK compare to other jurisdictions on these dimensions?
- Agglomeration and competitiveness: Through what channels do regional and national financial centres influence growth and international competitiveness of the UK financial services sector, and what role do agglomeration effects play?
- Financial services sub-sector competitiveness: How has the competitiveness of UK financial services evolved across sub-sectors since the global financial crisis, and what factors explain emerging opportunities and threats?
Change in UK economy: Capital allocation, consumer outcomes, and risk allocation
- Barriers to finance for non-financial services firms: What frictions or constraints limit non-financial services firms’ access to suitable finance at competitive prices, and how do these vary across firm types and macro-financial conditions?
- Consumer finance and growth: How does consumer use of financial services influence economic growth, and through which channels do financial inclusion, trust, and consumer protection shape these effects?
- Financial services regulation and incentives to grow: How does financial services regulation affect the incentives of financial and non-financial services firms to operate efficiently, improve productivity, innovate, and grow?
- Financial services sub-sectors as enablers of growth: Which financial services sub-sectors contribute most to sustainable long-term growth in the wider economy, and how can regulation support firms in these sectors?
- Risks of financial services activities to long-term growth: Which financial services activities pose the greatest risk to long-term UK growth and financial stability, and how do different regulatory approaches mitigate these risks?
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Wholesale markets
This theme examines the functioning, resilience and integrity of UK wholesale financial markets. Wholesale markets enable firms and investors to raise and allocate capital, manage risk, and support investment and growth. Their functioning is also important for our attractiveness as a location for international finance and is essential for financial stability and economic resilience.
Our research interests focus on three interconnected areas – market microstructure, market resilience and market integrity. The questions we explore in this section are necessarily more detailed, given the complexity of the markets.
Focus areas
Market microstructure
We are interested in understanding the mechanisms and practices through which trading takes places, and how these affect market liquidity and price discovery.
Market resilience
How structural developments, including long-term trends and technological change, affect the soundness, resilience and stability of the UK financial system, and whether current market arrangements enable the system to absorb shocks or adapt quickly when stress arises?
Market integrity
Fraud, financial crime and market abuse undermine investor confidence, raise firms’ financing costs, and discourage participation. We are interested in research that explores how effective policy and supervisory responses can help safeguard trust in wholesale markets, and how trust supports participation and overall market functioning.
Market microstructure
- Electronic Liquidity Providerss (ELPs) and market outcomes: How does liquidity provision by ELPs shape market outcomes in normal conditions and during stress episodes?
- Addressable liquidity: What proportion of market liquidity in UK equities is addressable, and how does this change during volatility spikes?
- Central Limit Order Book (CLOB): What is driving the decline in CLOB activity in equity trading in the UK, and what are the implications for price discovery and market efficiency?
- Closing auctions: What is the impact of closing auctions on market liquidity? How do the construction of closing auctions and agent behaviour affect market outcomes?
- 24-hour trading: How does the timing of UK equity trading relative to global markets – including daylight savings time shifts – affect intraday liquidity patterns, and what does this suggest about the effects of extending UK trading hours?
- Market features & outcomes: Which market design features improve resilience in UK equities and derivatives, and which features create measurable positive or negative externalities?
- Contracts for Difference (CFD) markets: How liquid are UK CFD markets, and which participants are key drivers of liquidity? How does CFD trading influence outcomes in the underlying equity markets?
- Retail participation & market outcomes: To what extent does increased retail participation in equity trading drive changes in market liquidity, volatility, and spreads?
- Innovation in retail/wholesale investments: How do shifts in investment strategies – including the rise of passive funds, high-frequency trading, and AI-driven trading – affect market functioning, integrity and financial system resilience?
Market resilience
- Fragmentation during market stress: During stress events, how does liquidity deteriorate across instruments and venues? What is the lead-lag structure of stress propagation? Do specific microstructure features – such as fragmentation, auctions, and tick constraints – amplify or dampen price impact and recovery times?
- Resilience of changing fixed income markets: How do evolving intermediation chains and constraints – such as dealer balance sheet constraints, growth of electronic liquidity providers, and the increased use of repo financing and central clearing – affect liquidity resilience in UK fixed income markets?
- Private markets: Does increased retail investor participation in funds exposed to private assets amplify liquidity stress and increase losses during period of market stress? Under what conditions do run-like dynamics emerge and transmit to the wider system?
- Passive investing and market stress: To what extent do passive vehicles (index funds and ETFs) amplify or dampen non-fundamental volatility and cross-asset correlations in UK markets during sell-offs?
- AI and financial stability: How can AI-driven trading strategies be identified in transaction reports? To what extent do such strategies contribute to herding and shock amplification in UK equity and corporate bond markets?
- Disclosure regulation and market outcomes: To what extent do disclosure and process reforms in primary markets and securitisation reporting reduce information asymmetry, improve liquidity, and enhance post-issuance price efficiency, particularly during period of stress?
- Environmental Social and Governance (ESG) regulation: How does ESG disclosure regulation affect information efficiency, mispricing, greenwashing, market segmentation and liquidity frictions in financial markets?
Market integrity
- Detection of manipulation under increased automation: Which features from message-level order books and transaction reports most reliably detect manipulative patterns? How do detection performance and market impact evolve as automation intensity increases?
- Manipulation and market stress: To what extent do market abuse risk indicators rise during periods of market stress, and if so, does abusive activity exacerbate volatility and liquidity breakdown?
- Prevention of manipulation: What detection, sanction, incentive, and reporting structures (including whistleblowing) most effectively deter wholesale market misconduct? How do these deterrents spill over to market quality and stability?
- Deterrence effectiveness: How do different enforcement instruments and regulatory interventions – including formal actions under the Market Abuse Regulation (MAR), UK Listing Rules (UKLRs), and alternative supervisory outcomes – compare in terms of their deterrence impact, behavioural change in market participants, and overall cost-effectiveness in maintaining market integrity?
- Conflicts of interest and market outcomes: Where do conflicts of interest in order routing, allocation, cross-selling, inducements, and research/payment structures measurably degrade execution quality or issuance outcomes? Which governance remedies mitigate harm without materially reducing market liquidity?
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Helping consumers
This section sets out our research priorities on how consumers navigate their financial lives. Our questions are guided by our strategy and the outcomes it aims to achieve – that consumers are better able to:
- Withstand changes in circumstances or financial shock.
- Save and invest more for later life.
- Have consistently positive experiences when engaging with financial services.
The questions explore the extent to which product design, pricing, information, regulation and technological change shape consumer behaviour and distributional outcomes. They also consider how financial shocks, regulatory interventions and market developments influence long‑term engagement, confidence and participation by consumers.
Focus areas
Navigating financial lives
People make financial decisions sequentially, imperfectly and often under stress. We are interested in how these decisions – and the shocks that disrupt them – shape consumers’ finances over time. We want to understand consumers’ financial resilience and what interventions help people build resilience and financial security.
Outcomes and trust
Financial decisions are shaped by regulation, market developments and shocks, and are often made with imperfect information. We are interested in how consumers and firms adapt their behaviour – from borrowing and investing to pricing and payments – and how these responses affect outcomes over time. We want to understand how these dynamics shape trust, engagement and confidence in financial market.
Consumer outcomes and growth
Regulation, misconduct, investment incentives, and lending decisions all shape what financial services deliver to consumers and the broader economy. We want to understand where consumer protection and support for growth are mutually reinforcing, rather than in tension.
Outcomes and trust
- Credit substitution: When access to credit is constrained, how do borrowers substitute across formal products, informal lending, and non-credit adjustments (such as not borrowing or cutting essential spending)? What are the distributional impacts?
- Impacts of regulatory silos on household decisions: To what extent does fragmentation across regulatory regimes (such as investment, pensions, mortgages) lead consumers to make choices that are less well suited to their circumstances across the lifecycle, and what frictions drive this?
- AI and pricing: How does AI-enabled personalised and algorithmic pricing in retail financial markets affect outcomes and prices across consumer groups, and does it converge on fair risk-based pricing or exploit information asymmetries?
- Long-term trust under price regulation: How do pricing interventions – such as defaults and price caps – affect consumer understanding, confidence, engagement, trust and behaviour in the medium and long term, including spillovers to other markets?
- Risk rebalancing and trust: How do regulatory choices that encourage or constrain risk-taking affect consumer trust and expectations, and what role do information quality and financial promotions play in shaping these effects?
- B2B payments: What drives business choice of different payment methods for B2B transactions, and what does the rapid growth in account‑to‑account (A2A/FPS) payments reveal about changing business needs and constraints?
Consumer outcomes and growth
- Resilience: How does household financial resilience influence macroeconomic outcomes and growth, what mechanisms drive economic scarring after shocks, and which interventions mitigate scarring?
- Fraud and trust: How do misconduct, fraud and scams – and associated regulatory responses – affect consumer participation, trust and market confidence?
- Consumer incentives: To what extent do incentives and choice architecture encouraging non-cash investing shift household portfolios towards more productive capital allocation, and what safeguards are needed given consumer preferences and capability?
- Retail bank incentives: How do retail banks allocate lending between household credit and the real economy? What drives these choices and what are the implications for growth?
- Cruickshank review: What has changed, and what has not, in competition and innovation in payments since the Cruickshank report? What factors explain persistent frictions?
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Regulation
This theme focuses on how we can regulate more effectively, efficiently and proportionately, including how regulatory tools, operating models and new technologies affect outcomes.
The research questions explore how regulatory requirements and innovation interact, how regulatory costs and uncertainty shape firm behaviour and market functioning, and how different regulatory design choices influence competition, consumer outcomes and market integrity.
They also examine the effectiveness of different regulatory tools and approaches, including how authorisation, supervision and enforcement work together in practice, and how regulation can continue to deliver strong outcomes as markets and technologies evolve.
In doing so, this work recognises that rapidly changing technologies, and their adoption in financial services, will increasingly require us to rethink how we regulate and which tools and approaches are most effective in achieving our primary objectives while supporting innovation.
Focus areas
Regulatory benefits and burdens
Research in this area supports evidence-based decisions on proportionality, risk rebalancing, and the cumulative impact of regulation on firms, consumers, and market functioning.
Regulatory tools and approaches
This theme aims to identify which tools work best in which contexts, how regulatory delivery can be made more effective, and how new technologies can be embedded without undermining trust or integrity. Several questions also consider trade‑offs between authorisation, supervision, and enforcement, including how the FCA’s current model compares internationally.
Innovation in financial markets and regulatory changes
This theme explores how innovation reshapes firm behaviour and market structure, and how regulation can adapt to manage emerging risks while supporting beneficial innovation.
Regulatory benefits and burdens
- Costs and benefits of regulatory models: What are the trade-offs between outcome-focused, principle-based regulation and prescriptive, risk-tiered approaches in terms of consumer outcomes, market integrity, innovation and compliance costs?
- Cost of regulation: What costs do firms incur to comply with regulatory requirements – including administrative, policy, implementation, legal, lobbying and opportunity costs – and which components are most material across firm types and activities?
- Compliance behaviour and response: To what extent do observed compliance costs reflect meeting requirements versus overcompliance (‘gold-plating’)? What factors drive overcompliance – such as regulatory uncertainty, enforcement, reputation and incentives? How do firms adjust when regulatory costs change?
- Benefits of regulation: What benefits do firms and markets derive from regulation – both perceived and realised – and how do these manifest in consumer engagement, trust, brand, value and creation of missing markets?
- Cost and benefits of regulation from an international perspective: How do the costs and benefits of regulation in the UK compare with those in other jurisdictions? How has this evolved over the past decade?
- Rebalancing risk from international perspective: How do market risk outcomes and regulatory intensity in the UK compare with peers? What are the consumer and market impacts of alternative rule designs, streamlining and different supervisory intensities?
- Cost of regulatory uncertainty vs benefits of flexibility: How does regulatory uncertainty affect firm investment, innovation, competition and risk-taking? What are the trade-offs between predictability and flexibility in regulatory design?
- Self-regulation: Under what market conditions do industry standards and self‑regulation deliver consumer protection and integrity outcomes, and where do failure modes indicate a need for formal regulation?
Regulatory tools and approaches
- Regulatory tools: Which consumer-facing regulatory tools – nudges, mandates, disclosures, guidance, communications – most effectively change firm behaviour and consumer outcomes, and in which contexts are they most effective?
- Supervision & enforcement approaches: How do targeted, high-impact enforcement and supervision approaches compare with broader strategies in shaping deterrence, compliance, market integrity and trust in markets and the regulator?
- Authorisation, supervision, and enforcement: How does the balance between authorisation, supervision, and enforcement affect costs and benefits of regulation across products and risks, including the regulatory perimeter?
- Gaps in provision of financial services: Where do regulatory requirements contribute to gaps in the provision of financial services? How large and persistent are these effects?
Innovation in financial markets and regulatory challenges
- New technologies in financial markets: How does the adoption of AI, Distributed Ledger Technology (DLT), and tokenisation affect competition and market structure in financial services - including entry, concentration, product variety and switching costs?
- Technology-assisted information and decision-making: How does increasing use of digital tools and AI-enabled decision support affect consumer decision-making and outcomes over time? Which disclosure and guardrail approaches best preserve outcomes when such tools are widespread?
- Interaction between regulatory requirements and innovation: Which regulatory requirements most constrain adoption of productivity‑enhancing innovation, and how do different regulatory models affect firms’ willingness to innovate and serve consumers with different profiles.
- Open Finance: How might the introduction of open finance reshape the structure of the financial services sector, and what implications could this have for the FCA’s regulatory models?
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How to engage
Collaboration can take many forms, and we are open to engaging in ways that are useful to both you and us. These include:
- Sharing relevant existing research, evidence or data that speaks to one or more of our questions.
- Discussing proposals for new research.
- Participating in workshops, working groups, roundtables, or expert interviews – please submit invites to [email protected]
- Engaging through our conferences and public events.
The scope and form of engagement will inevitably vary by question, timing, feasibility, and the capabilities and resources available to both you and us. We recognise that not every form of collaboration will suit every research question, and that not every researcher will be able to commit in the same way. However, this should not be a barrier to starting a conversation.
If you have ideas, evidence, or expertise that connects to our areas of interest, we would genuinely like to hear from you.
For all engagement with our areas of interest, please contact us.