FCA data shows sharp contraction in UK financial services workforce as AI, regulation, and market pressures reshape the sector

New analysis of FCA permissions data reveals a sharp contraction in UK financial services, with regulated roles falling across almost every permission type between Q1 and Q2 2025.

The steepest declines were in Mortgage & Home Finance (-11.6% individuals) and Consumer Credit (-10.5% individuals), reflecting housing market pressures, tighter regulation, and consolidation. Across the industry, FCA-registered individuals dropped -4.1% and firms fell -1.7%.

The research, published on tovodata.co.uk in Signals of Change: AI, Regulation, and the Shrinking Financial Services Workforce, suggests that automation, regulatory scrutiny, and market conditions are reshaping the sector faster than expected.

Louisa Laughton-Scott, Founder of TOVO, 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.”

Barbara Gottardi, CEO of Finbridge Global, 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 highlight a steep reduction in Client Money roles (with individuals authorised to hold and control client money down -7.9%), pointing to consolidation of oversight into fewer positions and greater reliance on technology in compliance and monitoring functions.

While the contraction is sharp, it may represent either a short-term correction or the beginning of a longer-term rebalancing of the UK financial services workforce.