• The Financial Conduct Authority says no regulatory barrier stops banks supporting lawful defence businesses, and most banks say they are open to defence SMEs.
  • It found friction and delay from enhanced due diligence, unclear reputational and ESG rationales, and poor identification of defence customers, not widespread exclusion.
  • It expects banks to apply proportionate, risk-based checks and review outcome data; the report creates no new obligations and is to be treated as retired by December 2028.