How is the UK regulatory landscape set to change?

On 17 March 2025, the government published a policy paper "New approach to ensure regulators and regulation support growth". This ambitious action plan aims to reform the regulatory landscape to support growth, innovation and private sector investment by ensuring regulations are proportionate, consistent and predictable. The plan also includes pledges from various regulators, illustrating their commitment to supporting the government's growth agenda and implementing changes within the next twelve months.

The plan covers three main areas:

• Tackling complexity and burden: The government aims to simplify and streamline regulations, to reduce bureaucracy for businesses. The government intends to reduce administrative costs for businesses by 25% by the end of the current Parliament by establishing a baseline for the administrative costs of regulation.
• Reducing uncertainty: The government will clarify regulators' roles and increase transparency, to create a regulatory environment that is easy to navigate and fosters growth.
• Challenging risk aversion: The government will ensure regulations are proportionate and encourage innovation. It plans to formalise performance reviews for regulatory bodies, holding them accountable for the reduction of administrative costs and the performance of their statutory duties.

In addition to this, regulators across various sectors have begun to announce changes that align with the government's pro-growth strategy, further highlighting the transformative approach set to be taken.

Further, the publication of the plan coincides with the prime minister's announcement to scrap NHS England, the biggest quasi-autonomous non-governmental organisation (quango). The government's regulatory reforms will continue to see quangos being merged and reviewed to save money and streamline regulation.

These recent developments indicate that the UK regulatory regime is set to undergo dramatic changes – including in the following specific areas.

Artificial intelligence

The government's action plan references the pro-innovation regulatory approach to AI set out in January 2025's AI Opportunities Action Plan. That plan stressed the importance of acting quickly to provide clarity on how frontier models will be regulated and urged the government to ensure that any AI regulation prioritises preserving the capability, trust and collaboration that the UK's AI Security Institute (AISI) has built up.

In its response to the AI Opportunities plan, the government said that it would consult on proposed AI legislation to protect against the critical risks associated with the next generation of powerful AI models and would establish the AISI as a statutory body. However, no consultation has yet materialised, and the government's growth action plan does not directly state that there will be a new AI-specific regulatory regime. There is a general sense that the government may well be dialling down its plans to put in place specific AI regulation any time soon.

As also called for in the AI Opportunities Action Plan, the government is considering amending UK intellectual property (IP) laws in order to facilitate use of copyright works for the purposes of training AI models. The government's preferred position (set out its recent consultation on AI and copyright) is to introduce an "opt-out" copyright exception, allowing use of content for training AI systems where IP holders have not reserved their rights. The ICO has commented on the implications of these plans for personal data regulation.

Regulatory Innovation Office

To drive innovation – a key element of the government's action plan – the government has established the Regulatory Innovation Office (RIO), which will identify barriers to innovation and assist regulators in adapting to new technologies. It has recently been announced that the RIO will be chaired by former Conservative science minister Lord David Willetts and the RIO is reportedly setting targets for regulatory bodies, such as the Food Standards Agency, to encourage innovation as part of the government's growth strategy.

The government's action plan outlines the RIO's collaboration with departments and regulators in the following priority areas:

AI and digital in healthcare

The RIO is working with the Department for Health and Social Care and healthcare regulators to identify the benefits of AI for the NHS. Key initiatives include the Medicines and Healthcare products Regulatory Agency's (MHRA) AI Airlock Programme, which aims to address new regulatory challenges, streamline submissions, reduce industry costs and enhance patient access to innovative healthcare products. The Regulatory Horizons Council Commission will support this work by advising on the regulation of generative AI in healthcare.

Alongside this, the MHRA has set out a pledge that from July 2025, it will permit point-of-care manufacturing of medicines to allow innovative products closer to patients. The National Institute for Health and Care Excellence (NICE) has also pledged to reduce evaluation time by a quarter and will look to complete 60% of Technology Appraisals within 240 working days by 2025/26 (this year 40% were completed in this time frame).

To improve alignment between MHRA decision and NICE guidance publication, the regulators will develop concurrent marketing authorisation and technology appraisal processes to reduce approval times for new medicines as well as launching an integrated pre-market scientific advice service.

Drones and autonomous technology

The government and the Civil Aviation Authority (CAA) are extending a successful trial using drones for urgent blood sample transfers for screening cancer patients. The trial has already significantly reduced travel times between Guy’s Hospital and St Thomas’s Hospital from 30 minutes to 2 minutes. The CAA is also working to establish a Drone Market Surveillance Authority to safely streamline drone manufacturing processes, which will increase the availability of drone usage for life-saving tasks such as blood sample transfers.

Engineering biology

The government has announced round two of the engineering biology sandbox fund, which aims to drive regulatory reform and boost innovation and investment in sectors like fuels, food, health and the environment. Collaboration with food regulatory agencies, including the Food Standards Agency and Food Standards Scotland, will speed up approval times for innovative products such as precision fermented foods, providing certainty for innovators and capturing growth benefits for the UK.

Competition

The government is working closely with the Competition and Markets Authority (CMA) to ensure its operations are efficient, predictable and proportionate for businesses and investors, while maintaining its independence. Building on the significant actions already taken by the CMA, the government plans to:

• Introduce a Growth-focused Strategic Steer to the CMA, following the conclusion of a consultation on the draft steer on 6 March.
• Launch a consultation on legislative reform proposals aimed at enhancing the pace, predictability and proportionality of the UK’s competition regimes. This will include proposals to clarify where mergers will be subject to investigation in the UK, addressing uncertainties with the existing Share of Supply and material influence tests.
• Implement the CMA's recent initiative to apply the 4Ps (pace, proportionality, predictability and process) across its digital markets work.
• Consider measures to support the CMA’s review of the Markets Regime, ensuring that binding remedies from CMA Market Investigations are regularly assessed for necessity.

Additionally, in line with the pro-growth agenda, CMA chief executive Sarah Cardell recently announced that the regulator will scrutinise fewer global deals, while cautioning that this does not mean an open season for anti-competitive mergers.

Data

The Information Commissioner's Office (ICO) has announced commitments to support the government's growth agenda. Key initiatives, which are referenced in the annex to the government's action plan, include:

• Making it easier for businesses to both transfer data internationally and engage with multiple regulators to ensure compliance.
• Supporting online advertising by simplifying consent requirements for cookies and other tracking technology, creating an exemption for specific low-risk advertising purposes.
• Piloting an extension to its regulatory sandbox for organisations to trial innovative data-driven solutions (under supervision from the ICO) with comfort against enforcement of some data protection requirements, beginning with exemptions from consent rules in the context of privacy-preserving advertising models.
• Introducing a statutory code of practice on AI and automated decision-making to give more regulatory certainty to developers and users of AI.

See the Regulatory Outlook for more on the ICO's commitments.

Environmental and planning

The government has set out how it intends to remove complexity and "tidy red tape" across environmental permitting and to ensure that the planning system supports growth.

It intends to streamline Nationally Significant Infrastructure Projects, or NSIPs, by easing environmental permit requirements for low-risk activities, allowing developers to bypass the need for certain consents. The government plans to consult on reforms in this area before Easter so we await further details as to what constitutes "low risk activities".

The government also plans to simplify permitting by encouraging improved cooperation between environmental regulators for major projects where multiple regulators have an interest by appointing a single lead regulator to make decisions on their behalf. In addition, it is exploring whether a single online planning portal can be used for all environmental agencies.

The action plan expects regulators to publish clear targets for processing applications and to measure their performance against those targets. Regulators are also expected to liaise with stakeholders as to how they can improve their services, with a view to preparing an improvement action plan by June 2025.

The plan sets out again the government's intention to reform the system of statutory consultees involved in planning decision-making. This includes its intention to make clear that statutory consultees should be focused on growth, to consult on removing some consultees and reducing when others are consulted, to monitor their performance and to enable them to recover their costs for advice.

The Environment Agency has made a number of pledges, including bringing its response times on planning applications back within 21 days by September 2025, providing dedicated planning support to priority sites contributing to housing and clean energy priorities through its National Infrastructure Team, and introducing a priority tracked service for more complex permit applications. Natural England has also made pledges to streamline its approach, including relating to nutrient pollution, and newt and bat licensing, which should lead to improved efficiency where these matters would otherwise delay projects. It is also looking to improve its transparency and consistency to help businesses it regulates to understand its decision making and reduce uncertainty.

Many of these measures fundamentally relate to increasing efficiency through relatively uncontroversial proposals to enhance cooperation, increase performance management, and drive transparency and consistency. Alongside these, however, are measures to reduce certain environmental requirements, such as easing permitting requirements for "low-risk" activities, and the introduction of a requirement for statutory consultees to focus on growth. These measures would seem to lower the focus on environmental protection and to shift towards economic priorities. The government has talked many times of its reforms leading to a win-win for developers and the environment. As these measures are taken forward, that will be the backdrop against which they are assessed.

Financial services

A number of changes to reform the regulatory landscape in financial services have also been introduced.

Consolidation of Payment Systems Regulator

The government plans to integrate the Payment Systems Regulator primarily within the Financial Conduct Authority (FCA), aiming to streamline the regulatory framework by assigning the FCA the responsibility of fostering innovation and competition in the payment sector. A detailed consultation on this consolidation will take place over the summer, with subsequent legislation anticipated.

Simplification of regulatory duties

HM Treasury intends to review the "have regards" of the Prudential Regulation Authority (PRA) and FCA to identify opportunities for rationalisation and ensure a focus on their priorities as well as reduce regulatory reporting requirements for firms. Efforts will be made to align financial service regulators to deliver optimal outcomes, ensuring the sector remains world-leading.

For example, the Financial Ombudsman Service (FOS) will be scrutinised to ensure it functions effectively for customers, small businesses and financial services firms. The Economic Secretary will investigate whether the FOS is fulfilling its role as an impartial dispute resolution service that efficiently addresses complaints, as well as addressing concerns regarding the FOS framework resulting in quasi-regulatory behaviour, the retrospective application of current standards and compensation practices. The review is expected to conclude by summer, with potential legislation to follow.

Changes to financial services

Building on the chancellor's Mansion House announcements, the action plan sets out that the government will continue to develop proposals from financial regulators. HM Treasury will collaborate with the Office for Investment and the City of London Corporation to establish a concierge service that enhances the UK's attractiveness as a destination for global financial services. This service aims to simplify the navigation of the UK regulatory landscape and broader barriers to entry.

The FCA will be empowered to support early-stage innovative firms in conducting regulated activities through dedicated support, issuing "minded to approve" notices for fundraising, and potentially updating the legislative framework to allow firms to conduct limited regulated activities under streamlined conditions.

Alongside these changes, the FCA and PRA have made several commitments to support the financial sector. The FCA will provide a dedicated case officer to every firm within its regulatory sandbox and allocate 50% more dedicated supervisors to early and high-growth firms to help them navigate the regulatory system and support their growth. Additionally, the FCA will extend pre-application support to all wholesale payments and crypto firms and indicate more often that it is "minded to approve" start-ups to help them secure funding. To support greater home ownership, the FCA will simplify mortgage and advice rules. It will also review contactless payment limits, including removing the £100 limit on individual payments, and accelerate the review of capital requirements for specialised trading firms.

The PRA will consult on a matching adjustment investment accelerator aimed at reducing the time between life insurers identifying a productive investment opportunity and making that investment.

Asset management

While not directly mentioned in its action plan, the government has already stated in its white paper on financial services, it will take forward financial service reforms already in-flight.

This includes the "Smarter Financial Services Regulatory Framework" published in July 2023 which set out HM Treasury’s programme for delivering a post-Brexit regime for financial services tailored to the UK. The FCA has an important role in filling in the set framework for financial services and will be incorporating input from the regulator’s own "Future Regulatory Review", and has put forward the following three priorities for the UK’s regime for asset management:

• making the regime for alternative fund managers more proportionate;
• updating the regime for retail funds; and
• supporting technological innovation.
• better meet the needs of investors, both domestic and international, and retail and professional;
• enable technological development, innovation and better use of data;
• are consistent with international standards and take account of rules in other jurisdictions, so that firms can continue to operate efficiently on a global basis; and
• are effective and proportionate, simplifying and standardising requirements where possible.

The regulator is looking to ensure that any changes:

• better meet the needs of investors, both domestic and international, and retail and professional;
• enable technological development, innovation and better use of data;
• are consistent with international standards and take account of rules in other jurisdictions, so that firms can continue to operate efficiently on a global basis; and
• are effective and proportionate, simplifying and standardising requirements where possible.

The FCA is in the preliminary stages considering the new UK asset management regime. Given the scale of areas for potential reform, its work is likely to take a number of years to develop and implement in full.

Investment product disclosures reforms are closer, as the UK government has laid the groundwork for a new future disclosure regime (having revoked the retained EU law relating to retail disclosures, primarily derived from the Packaged Retail Investment and Insurance Products regulations). This regime is known as the Consumer Composite Investments Regulations, and the FCA is currently consulting on how this regime should be fleshed out, with final rules expected later in 2025.

Health and safety

The action plan outlines that the government will work with health and safety regulators to improve current regimes and reduce unnecessary burdens. Consultation with the Health and Safety Executive (HSE) and the Department for Environment Food and Rural Affairs will include the recognition of international approvals to bring chemical products, including biocides, to the UK market in a quicker and more cost-effective manner.

To assist with improving health and safety regulation, the HSE pledges to consult in 2025 on improvements to the reporting requirements under the Reporting of Injuries, Diseases and Dangerous Occurrence Regulations 2013. The HSE also plans to review older legislation, specifically the Pressure Systems Safety Regulations 2000 and the Lifting Operations and Lifting Equipment Regulations 1998, to remove unnecessary regulatory burdens and identify changes required to reflect technological advances. If achieved, old and burdensome legislation that is not fit for the modern world will be replaced with regulations that provide for innovation.

Osborne Clarke comment

The government's action plan aims to modernise the regulatory landscape to support investment, innovation and growth. Simplifying regulations and reducing administrative burdens will be welcomed by businesses across all sectors. Inevitably, there will be questions about the practicality of implementing the proposed amendments, including how changes to regulation and legislation will be funded by a government struggling with its finances.

Additionally, with regulators looking to adopt new approaches to regulation in line with the government's pro-growth agenda, it is clear that a transformative shift to the UK's regulatory landscape is on the horizon.

The evolving landscape presents both opportunities and challenges, and proactive engagement will be crucial for navigating this new era of regulation. Businesses will need to stay informed to be able to effectively adapt their compliance strategies to these changes.

If you have any questions about legal issues relating to the impact of regulatory change on your business, please get in touch with one of our team below or your usual Osborne Clarke contact.

This Insight was drafted with the assistance of Charlotte D'Arcy and Megan Gibbons, trainee solicitors at Osborne Clarke.