Kyte Ekstrom
3 Apr 2025
All the regulation you need to know - on the go! You don't need to trawl through the FCA website to find the regulation that pertains to your firm. All you need to do is read our monthly newsletter. Now, what are you going to do with all that extra time you just saved...
GENERAL
FCA publishes 5-year strategy - Strategy 2025-2030
The FCA has outlined its strategic roadmap for the next five years, focusing on four main priorities aimed at strengthening trust, improving consumer experience, and supporting economic growth.
The FCA’s Strategy Implementation Highlights:
Proportional Regulation: The FCA will adopt a lighter-touch approach for firms demonstrating good conduct, focusing resources on higher-risk entities.
Supervision Simplification: Supervisory priorities will be streamlined, and the regulator will assess whether certain data return requirements can be eliminated.
Process Modernisation: Authorisation processes will be digitised and simplified to enhance efficiency.
Strategic Investments: The FCA plans to invest in technology, talent, and systems to support its strategic goals.
Expansion of Open Finance: As it integrates the Payment Systems Regulator, the FCA will build on Open Banking to introduce Open Finance, expanding consumer access and control over financial data.
The FCA have also published an accompanying webpage which sets out two to four outcomes for each of the strategic themes and the key metrics which will be used to track them. The FCA intends to update the pages annually with the latest data to show progress.
FCA publishes feedback statement - Consumer duty rule review
The FCA’s feedback statement (FS25/2) addresses immediate actions and future reforms following the introduction of the Consumer Duty, outlining an ambitious programme of regulatory review and simplification.
The FCA’s planned work is grouped into four broad categories:
Reviewing the Foundations
Reassessing core rules and guidance, including responsible lending and mortgage advice standards.
Future-Proofing Disclosure
Ensuring disclosure rules remain relevant and effective under the Consumer Duty.
Reducing the Administrative Burden
Reviewing legacy communications such as Dear CEO and portfolio letters issued before the 2022–2025 strategy, with a view to withdrawing them.
Streamlining Requirements
Simplifying rules, especially around advertising of consumer credit and cross-border insurance conduct regulations.
The key areas of focus are as follows:
Rules Under Review:
a. Responsible lending and mortgage advice
b. Insurance sector’s international conduct rules
c. Consumer credit advertising rules
d. Legacy FCA communications (e.g. Dear CEO letters)
Clarifications and Updates Proposed:
Interaction of product governance and fair value rules
Application of Consumer Duty across distribution chains
Review of the Senior Management Arrangements, Systems and Controls (SYSC) sourcebook
FCA publishes findings of multi-firm review - Treatment of customers in vulnerable circumstances
In March 2024, the FCA launched a multi-firm review to assess how well firms were treating customers in vulnerable circumstances, and whether existing guidance (FG21/1) remains suitable under the newly introduced Consumer Duty.
Key areas for Improvement include:
Outcomes Monitoring: Firms need to strengthen how they track and assess outcomes for vulnerable customers.
Clear Communication: Many firms fell short in delivering clear and accessible information tailored to the needs of vulnerable groups.
Product & Service Design: There is room for better integration of vulnerable consumers' needs in the design phase of products and services.
The overall conclusions reached:
The FCA will not update FG21/1, as it still provides appropriate and valuable support in conjunction with the Consumer Duty.
Firms are urged to leverage the good practice examples identified in the review to improve their approach to supporting vulnerable customers.
FCA multi-firm review: Firms' treatment of customers in vulnerable circumstances
FCA publishes findings of multi-firm review - Consumer support under consumer duty
The FCA conducted a multi-firm review using a quantitative survey targeting banks, insurers, consumer finance firms, and others to evaluate how well they are meeting the consumer support outcome required by the Consumer Duty.
The key Findings include:
General Awareness: most firms have considered customer needs, but gaps in implementation have been identified.
Areas for Improvement:
Misaligned Support Processes: Some firms failed to structure support systems around customers' actual needs.
Target Market Understanding: Several lacked clarity on the specific needs of their target audiences.
Poor Customer Experiences: Examples included long wait times and inaccessible information, leading to negative outcomes.
The FCA has also published a webpage illustrating both positive examples and common shortcomings to help firms benchmark their practices and align with regulatory expectations under the Consumer Duty.
FCA multi-firm review: Firms' approaches to the consumer support outcome
FCA publishes new webpages - Applications for senior management functions
The FCA has published two new webpages which relate to applications for approval to perform a senior management function (SMF). The first webpage provides an overview of the application process, covering common reasons why an application may be delayed, the supporting evidence that is needed and what a good application looks like. The second webpage provides further detail on what evidence the FCA expects from firms applying for an SMF in some common scenarios, which includes examples of cases where the FCA might have concerns about an SMF candidate’s fitness and propriety.
HM Treasury publishes action plan - Ensuring regulators and regulation support growth
HM Treasury has released an action plan aimed at ensuring the UK’s regulatory framework—across business, finance, energy, and environmental sectors—supports innovation, growth, and accountability. The goal is to enable a regulatory system that fosters economic dynamism while holding regulators responsible for both regulatory quality and enforcement.
Three strategic actions have been identified:
Simplifying Regulation: Reduce complexity and regulatory burdens on businesses and financial institutions.
Reducing Systemic Uncertainty: Clarify and stabilise the regulatory landscape to support long-term planning and investment.
Challenging Risk Aversion: Address excessive conservatism in regulatory decision-making that may stifle innovation and growth.
An annex to the plan outlines regulator-specific commitments, all intended to be implementable within 12 months and aimed at delivering tangible growth impact:
FCA Commitments:
Simplify mortgage and financial advice rules
Review contactless payment limits
Accelerate capital requirement reviews for specialised trading firms
PRA Commitments:
Consult on a 'matching adjustment investment accelerator' to speed up life insurers' access to productive investments
HM Treasury will also review the ‘have regards’ obligations—requirements for the FCA and PRA to consider specified factors—to identify opportunities for rationalisation and enhance regulatory focus on core priorities.
FCA publishes engagement paper on future approach - Contactless payment limits
The FCA’s engagement paper explores more flexible alternatives to the current contactless payment limits, aimed at supporting innovation and fraud reduction.
Key options include:
Risk-Based Exemption
Allows Payment Service Providers (PSPs) to set their own contactless limits, provided they maintain low fraud rates.
Amended Limits
Revising the existing value or frequency thresholds under a modified regulatory exemption.
Consumer Duty Alignment
Shifting from fixed rules to a more principles-based approach, relying on firms’ obligations under the Consumer Duty to ensure safe and fair customer outcomes.
The FCA plans to prioritise changes to the contactless exemption before overhauling broader SCA regulations, aligning with the UK government’s National Payments Vision.
Comments on the paper are welcomed by 9 May 2025.
FCA engagement paper: Contactless payment limits
Updates provided by FCA and PRA - Diversity and inclusion proposals
On 11 March 2025, both the FCA and the PRA wrote to the House of Commons Treasury Committee confirming that they will not move forward with their proposed D&I regulatory frameworks, originally outlined in FCA CP23/20 and PRA CP18/23 (September 2023 consultations).
The reasons for this decision include:
Stakeholder Feedback: Broad-ranging feedback included concerns—particularly from the Treasury Committee—around the reporting requirements in the proposals.
Legislative Considerations: Anticipated future legislation on D&I is influencing the regulators' decision to pause formal rulemaking until the legal landscape is clearer.
Regulatory Burden: The PRA noted that new D&I requirements could conflict with broader objectives to reduce regulatory complexity and costs for firms.
FCA fines and bans hedge fund manager - Lack of integrity
On 3 March 2025, the FCA issued a decision notice to Robin Crispin Odey, founder and majority owner of Odey Asset Management LLP, imposing a fine of £1,835,200, and prohibition from performing any function in relation to regulated activities.
The FCA found that Mr Odey:
Lacked integrity, failing to meet the fit and proper test outlined in the FCA Handbook
Deliberately frustrated the firm’s disciplinary process after sexual harassment allegations were made against him
Displayed reckless disregard for governance at his firm
Mr Odey has referred the decision to the Upper Tribunal (Tax and Chancery Chamber), which will independently review the case and determine whether to uphold, vary, or annul the FCA’s findings.
Supporting AI, innovation and growth in financial services - FCA and ICO to hold roundtable
The FCA and Information Commissioner's Office (ICO) have jointly written to trade association chairs and CEOs of financial services firms to address regulatory challenges around AI deployment in the sector.
A recent FCA and Bank of England survey revealed that data protection and the Consumer Duty are viewed as significant regulatory constraints to the effective adoption of artificial intelligence (AI). The letter signals a shared commitment by the FCA and ICO to supporting responsible innovation while maintaining appropriate consumer and data safeguards.
A roundtable event will be held on 9 May 2025 to: Explore regulatory uncertainties, Discuss collaborative approaches to support AI-driven growth and, Identify specific data protection and regulatory areas where firms require more guidance
Firms interested in attending were asked to respond by 21 March 2025.
FCA provides update - Enforcement investigations proposals
The FCA consulted in February and November 2024 (CP24/2) on proposals to enhance the transparency of enforcement investigations. A recent letter to the Treasury Select Committee outlines the regulator’s final decisions on these proposals.
The FCA has decided against replacing the current “exceptional circumstances” test with a broader “public interest” test for publicly announcing enforcement investigations into regulated firms.
The FCA is Proceeding With the following select proposals:
Confirming Known Investigations:
The FCA will reactively confirm investigations already disclosed publicly by firms, other regulators, or through market announcements.
Notifications for Unregulated Entities:
The FCA will publicly highlight potentially unlawful activity by:
Unregulated firms
Regulated firms acting outside their regulatory perimeter – especially when this helps protect consumers or supports ongoing investigations.
Anonymous Investigation Updates:
The FCA will begin publishing greater detail about the nature of investigations, on an anonymous basis, to provide stakeholders with more visibility.
The final policy and an updated Enforcement Guide will be published by the end of June 2025.
FCA takes first enforcement action against a UK recognised investment exchange - Systems and control failures
On 19 March 2025, the FCA fined the London Metal Exchange £9.25 million for failing to maintain adequate systems and controls during extreme market stress linked to nickel trading volatility in March 2022. The firm suspended trading and cancelled trades, breaching the FCA’s Recognised Investment Exchanges sourcebook and EU RTS 7 organisational standards for trading venues.
PAYMENTS
Government announces plans to consolidate PSR into FCA - Evolution of payments landscape
The UK government has announced its intention to integrate the PSR's functions into the FCA, aiming to create a more streamlined regulatory environment and reduce duplication between regulators. The move is part of a broader strategy to minimise regulatory burdens and support the government’s growth agenda.
The government seeks to simplify payment regulation to allow firms to focus resources on innovation and service delivery. No immediate changes will be made to the PSR’s remit or operations. It will retain its statutory powers until legislation is passed. The move is part of a wider review of the UK regulatory framework, aimed at ensuring regulators support economic growth and do not impede progress.
Both the FCA and PSR have published supportive statements acknowledging the announcement and its implications. The government emphasised that regulatory structures will continue to be reviewed and refined over time.
INSURANCE
FCA launches market study - Distribution of pure protection insurance products
The FCA has launched a market study to assess how effectively the distribution of pure protection products serves retail consumers.
The market study focuses is on four key products:
Term assurance
Critical illness cover
Income protection insurance
Whole of life insurance
The study will investigate the following:
Commission Structures: Assessing whether current incentives align with good consumer outcomes.
Competitive Dynamics: Evaluating constraints on insurers and intermediaries, and the roles of reinsurers and comparison platforms.
Innovation Barriers: Identifying potential obstacles to product innovation and investment.
Consumer Outcomes: Examining whether observed outcomes meet expectations under the Consumer Duty and Product Governance rules.
An interim report with findings and proposed actions will be published by end of 2025. Additional topic-specific analysis will be released during the study to provide insights into emerging FCA views.
MOTOR FINANCE
FCA publishes statement on next steps - Motor finance review
The FCA is reviewing historical use of DCAs in motor finance, following the Court of Appeal’s decision in Johnson v FirstRand Bank Ltd (MotoNovo Finance) [2024] EWCA Civ 1282. The judgment suggests there may be widespread liability for firms where commission disclosures were inadequate. The Supreme Court will hear the appeal from 1 to 3 April 2025.
The FCA will not issue a further update in May 2025, instead, it will announce its decision on whether to propose a redress scheme within six weeks of the Supreme Court’s ruling. The FCA may also consult separately on related rule changes, depending on the Court’s outcome.
FCA: Statement on motor finance review next steps
CRYPTO ASSETS
FCA announces individual sentencing - Illegal cryptoasset activity
An individual has been sentenced to four years in prison by Southwark Crown Court for illegally operating crypto ATMs—the first criminal conviction of its kind in the UK.
The individual pleaded guilty on 30 September 2024 to five charges related to illegal cryptoasset activity totalling over £2.5 million. The offences took place between December 2021 and March 2022.
The individual Ran crypto ATMs at 28 locations via a company despite FCA registration refusal under the Money Laundering Regulations 2017. The individual went on to operated up to 12 ATMs under false identities to avoid detection. The individual did not perform required checks, potentially enabling criminals to launder money through the machines.