Regulation as a Growth Lever: What the FCA's Scale-Up Unit and Captive Insurance Plans Have in Common

Regulators don't usually get credit for helping businesses grow. Most firms see rulebooks as friction, not fuel. But two announcements from the FCA and PRA suggest the UK is trying something different: using regulation itself as a competitive tool to keep fast-growing financial firms from leaving.

Look closely, and the same logic runs through both moves.

The Scale-Up Unit: Support Before Firms Outgrow the System

On paper, the FCA's Scale-Up Unit is a support programme. In practice, it's an admission that fast-growing firms need something different from standard supervision.

Five new firms have joined the initiative: ClearScore, Modulr, Teya, Urban Jungle and Zilch. They span payments, consumer credit, insurtech and credit information — different sectors, same problem. Growth outpaces governance, and governance gaps eventually become regulatory problems.

The unit gives these firms tailored regulatory engagement as they:

Launch new products
Respond to policy changes
Build governance and risk controls that scale with the business

This isn't charity. The FCA ran a pilot with 15 high-growth firms between July 2025 and March 2026, publishing insights on 10 August 2026. The finding was blunt: firms that invest early in governance and controls manage growth better than those that bolt it on later.

Jessica Rusu, the FCA's chief data, information and innovation officer, put the ambition plainly: the UK should remain "one of the best places in the world to start, grow and scale a financial services business."

That's a statement about competitiveness, not just consumer protection.

Captive Insurance: A Different Sector, the Same Signal

The second initiative looks unrelated at first glance. The PRA and FCA have proposed a new captive insurance regime, aimed at positioning the UK as a hub for a market that has, until now, largely sat offshore.

Captive insurance — where a company sets up its own insurer to cover its own risks — has traditionally gone to jurisdictions like Bermuda or Guernsey. The UK's proposal is a direct attempt to bring that business home.

The mechanism is different from the Scale-Up Unit. The intent is not.

Why These Two Initiatives Belong in the Same Story

Put side by side, the pattern is hard to miss:

Firms are mobile. Fintechs can incorporate elsewhere. Captive insurers already do.
Regulation is now a differentiator, not just a cost of doing business.
The UK is choosing to compete on regulatory design, not just on tax or infrastructure.

Both initiatives share a working assumption: if the rulebook is too rigid, too slow, or too generic, ambitious firms will scale somewhere else — or won't scale in the UK at all.

The FCA's own numbers back this up. Since launching its innovation services, it has supported over 1,000 innovative and growing firms. That's not a side project. That's infrastructure.

What This Means for Firms Operating in the UK

If you run a growing financial services business, three things are worth noting:

Regulatory engagement is no longer just about compliance. It's becoming a growth resource, if you know how to use it.
Governance maturity matters earlier than founders think. The FCA's pilot data is explicit: firms that build controls before they're forced to tend to scale more sustainably.
Sector-specific regimes are coming. Captive insurance is the current example. It won't be the last niche market the UK tries to reshape around competitiveness.

None of this guarantees success. Regulatory goodwill doesn't fix a bad business model, and tailored support doesn't replace sound risk management. But the direction is clear enough to act on.

Key takeaways

The FCA's Scale-Up Unit and the proposed captive insurance regime both use regulation as a growth strategy, not just a control mechanism.
Five new firms — ClearScore, Modulr, Teya, Urban Jungle and Zilch — have joined the Scale-Up Unit, joining an earlier cohort of six jointly regulated firms.
FCA pilot data shows that early investment in governance and risk controls correlates with more sustainable growth.
The captive insurance proposal aims to bring business back from offshore hubs, signalling the same competitive intent in a different sector.
For UK financial firms, proactive regulatory engagement is becoming a genuine advantage — not just a defensive necessity.