How the financial services workforce is shrinking
The UK financial services sector is experiencing a major contraction in its workforce, the seriousness of which is revealed by analysis of recent Financial Conduct Authority permissions data. Between Q1 and Q2 of 2025, regulated roles decreased across nearly all areas, driven by automation, regulatory pressures and difficult market conditions.
Flat-lining Markets and Financial Regulation
Most notably, Mortgage & Home Finance roles fell by 11.6%, while Consumer Credit roles shrank by 10.5%. This is partly caused by two sources of pressure. Firstly, the housing market, despite modest signs of improvement, remains sluggish. Secondly, the regulation of financial services is becoming tighter. FCA compliance consultants play an important part in helping service providers navigate these difficult waters. However, even the most experienced FCA compliance consultants are constrained by the limits of FCA regulation.
Overall, the number of FCA-registered individuals dropped 4.1%, with regulated firms shrinking by 1.7%. Client Money roles also declined by 7.9%, indicating a consolidation of responsibilities and increased use of technology for compliance.
Technological Innovation
Industry experts report that banks are rapidly embedding AI and automation, shifting focus away from traditional workforces towards technology-driven efficiency. This structural transformation is about more than cost-cutting – it’s the reinvention of operational processes to create value in a changing landscape.
The findings signal a fundamental reshaping of the UK financial services workforce, emphasising the growing impact of digital technologies and tighter regulation. Together, these factors are accelerating the sector’s evolution faster than many anticipated. Firms are adapting by reducing headcount and reorganising around new technological capabilities to remain competitive and compliant.
