The UK financial services workforce is experiencing a marked contraction, with new analysis of FCA permissions data showing a decline across nearly all regulated roles between Q1 and Q2 2025.
According to IFA, the steepest reductions were recorded in mortgage and home finance, where authorised individuals dropped by 11.6%, and in consumer credit, which saw a 10.5% decline.
These falls reflect pressure in the housing market, regulatory tightening and a wave of consolidation. Across the industry, FCA-registered individuals declined by 4.1%, while the number of authorised firms fell by 1.7%.
The research, published on tovodata.co.uk in Signals of Change: AI, Regulation, and the Shrinking Financial Services Workforce, attributes the contraction to a combination of automation, tougher scrutiny from regulators and challenging market conditions.
TOVO founder Louisa Laughton-Scott said, “When we analysed FCA permissions data from Q1 to Q2, we found Mortgage & Home Finance roles had shrunk by 11.6%, the sharpest drop across the industry. This is part of a wider contraction in regulated financial services roles, with Consumer Credit and Payment Services & E-Money also down double digits. Our specialists point to automation, regulatory change, and economic pressure as the forces behind this shift. Clear signals that the financial services workforce is being reshaped.”
The contraction is not limited to lending and credit. Banking roles fell 4.4%, with evidence suggesting that artificial intelligence and automation are replacing traditional staffing models. Finbridge Global CEO Barbara Gottardi said, “A 4.4% drop in regulated banking roles shows a structural shift — from traditional headcount to technology-driven horsepower. What we’re seeing now is not experimentation but acceleration: banks are embedding (and must) AI and automation at scale, transforming the way value is created. The winners will be those who don’t just cut costs but reimagine processes and to end.”
The findings also underline a 7.9% fall in individuals authorised to manage client money, a sign of oversight responsibilities being consolidated into fewer roles while technology takes on a larger role in compliance and monitoring functions.
Together, the results highlight how quickly the UK financial services workforce is evolving under the combined weight of regulatory change, economic uncertainty and the rapid adoption of AI.
Keep up with all the latest RegTech news here
Copyright © 2025 RegTech Analyst
Copyright © 2018 RegTech Analyst
