6 Nov 2025
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GENERAL
Bank of England publishes speech - How innovation is reshaping the financial system
In a recent speech, Sasha Mills, Executive Director at the Bank of England, reaffirmed the Bank’s support for responsible innovation in financial systems.
Key points include:
Resilience in DLT Systems:
Emphasised the need for strong risk management in distributed ledger technology (DLT), especially around cyber risks and cross-chain bridges. Clarity is needed on who is responsible for resilience in wholesale use.
RTGS Synchronisation Interface:
The Bank is developing a synchronisation interface to enable conditional settlement of central bank funds with assets on external ledgers, including DLT.
Stablecoins and Market Structure:
Mills highlighted the potential long-term impact of stablecoins on credit creation and market-based finance.
In the short term, the Bank is considering holding limits to monitor effects on credit cost and availability.
Upcoming Regulation:
A consultation paper will be published later this year on the regulation of systemic stablecoins.
Bank of England - speech by Sasha Mills
FCA publishes speech - Regulatory perspective and 2025 priorities
In her speech, Lucy Castledine reaffirmed the FCA’s commitment to transforming the UK’s financial services landscape, underpinned by four strategic priorities:
Supporting Growth and Innovation
The FCA aims to boost UK financial services competitiveness by enabling responsible investment and supporting innovation.
The strategy reflects the UK’s ambition to remain a global financial leader, while ensuring consumer protection and market integrity.
Becoming a Smarter Regulator
Focus on process improvement and digital transformation to enhance regulatory efficiency and effectiveness.
Embracing technology and data to enable more proactive supervision and risk detection.
Helping Consumers Navigate Financial Decisions
The FCA continues to focus on consumer empowerment, ensuring people can make informed decisionsthroughout their financial lives.
This includes work on frameworks like targeted support, which allow firms to provide helpful suggestions to consumer groups without crossing into regulated advice.
Fighting Financial Crime
The FCA is prioritising the unlawful promotion of financial services, particularly on social media platforms.
Efforts include identifying and disrupting scams and misleading promotions, with stronger enforcement where needed.
Other Notable Points
Consumer Duty Impact: Castledine highlighted how the new Consumer Duty has shifted expectations on firm behaviour and raised standards of care and responsibility.
Targeted Support Framework: She reiterated the FCA’s ongoing development of this approach to bridge the advice-guidance gap, offering consumers meaningful help without formal advice.
HM Treasury announces launch - Joint FCA and PRA Scale-Up Unit
HM Treasury has announced the launch of a new Scale-Up Unit to help high-potential financial services firms grow in the UK, as part of Chancellor Rachel Reeves’ plan to “supercharge” the sector.
The unit will first support deposit-takers and insurers, offering help on:
Navigating regulatory processes
Launching product innovations
The service will extend to other regulated financial services firms in 2026. The Scale-Up Unit is designed to complement, not replace, existing FCA and PRA support services. Firms meeting the eligibility criteria can apply to join the initial cohort by 30 November 2025. Engagement with selected firms will begin in December 2025.
FCA publishes warning to investors - Risks surrounding contracts for difference
The FCA has issued a warning to retail investors in contracts for difference (CFDs) about losing key consumer protections.
Key Concerns:
High-pressure tactics:
Some firms are pressuring retail investors to classify themselves as 'professional clients', removing important safeguards and exposing them to greater financial loss.
Unregulated promotions:
Investors are being targeted by finfluencers promoting offshore, unregulated firms, often without clear disclosure.
FCA Action and Expectations:
Firms must not miscategorise clients or promote elective professional status to avoid retail protections.
The FCA will take enforcement action against: Firms breaching rules & Finfluencers illegally promoting financial products.
FCA publishes letter trailing proposals - Application of consumer duty to wholesale firms
The FCA has written to HM Treasury outlining its intention to adjust Consumer Duty rules to better reflect the nature of wholesale markets, aiming to remove “disproportionate burdens” on firms primarily engaged in wholesale activity.
Key Points:
The FCA intends to amend Consumer Duty rules where they create unnecessary obligations for wholesale-focused firms.
A consultation will be launched this year to revise the client categorisation framework, recognising that some investors do not require retail-level protections due to their expertise or resources.
The FCA is considering a new test to help firms identify individuals who may appropriately be treated as professional clients.
The FCA suggests HM Treasury consider modernising exemptions in:
The Financial Promotion Order (2005)
The Promotion of Collective Investment Schemes (Exemptions) Order (2001)
In H1 2026, the FCA will consult on:
Adjustments to distribution chain rules
Potential exemptions from the Consumer Duty for certain wholesale activities
Non-UK Business
The FCA is also reviewing whether to exclude business with non-UK customers from the scope of the Consumer Duty altogether.
FCA publishes webpages - Consumer duty focus areas for 2025/26 and update on streamlining rule review (FS25/2)
The FCA has outlined its priority areas for supervising and embedding the Consumer Duty over the coming year. These span supervision, thematic reviews, cross-regulator coordination, and simplification of existing rules.
Multi-Firm and Cross-Sector Projects
The FCA will carry out cross-cutting, multi-firm reviews to assess how firms are:
Embedding the Consumer Duty into practice.
Designing products and services to meet customer needs.
Meeting outcomes monitoring requirements.
Findings will be used to share good practice across sectors.
Joint Work with ICO
In Q1 2026, the FCA and the Information Commissioner’s Office (ICO) will provide clarity on how Consumer Duty requirements interact with data protection laws.
Sector-Specific Work
Pure Protection Insurance: Interim market study findings due end of 2025.
Unit-Linked Pensions & Long-Term Savings: Findings expected in late 2025, focusing on:
Charge transparency across the value chain.
How firms assess overall product value.
Upcoming areas of focus:
Fair value in SME business current accounts.
Consumer understanding in the credit card market.
Fair value assessments in wealth and advice firms.
Model Portfolio Services (MPS): Review starting Q4 2025, with findings due summer 2026.
Rule Simplification and Streamlining
Following feedback in FS25/2 and the July 2024 call for input, the FCA:
Will not pursue broader reviews of its Product Governance, CASS, or Training & Competence sourcebooks at this time.
Will focus this year on simplifying Systems and Controls (SYSC) rules, particularly around conflicts of interest.
Continues to explore ways to reduce complexity and offer channels for firms to flag overlapping or burdensome rules.
FCA - Our Consumer Duty focus areas
FCA - Consumer Duty requirements review: update
FCA publishes consultation paper (CP25/28) - Progressing fund tokenisation
The FCA has published CP25/28, setting out proposals to support the adoption of tokenisation in UK authorised funds, using distributed ledger technology (DLT).
Key Proposals:
Tokenisation Definition:
Tokenisation is defined as the digital representation of asset ownership recorded on DLT.
Blueprint Model Guidance:
Provides operational guidance for tokenised funds using:
DLT-based fund registers
Smart contracts for eligibility checks
Measures to manage network risk
COLL Rule Changes – Direct-to-Fund Model:
Introduces a new transaction model allowing investors to transact directly with authorised funds, supporting both conventional and tokenised funds.
Aims to enhance efficiency and align with international practices.
Tokenisation Roadmap:
Sets out FCA’s future work to:
Explore use of public blockchains
Enable on-chain settlement involving digital assets
Future Tokenisation Models:
Discussion chapter considers:
Retail-scale tokenised portfolio management
Use of DLT in model portfolios
Potential updates to rules to support this evolution
Consultation deadline (main proposals): 21 November 2025
Discussion chapter (future models): 12 December 2025
Final rules and policy statement expected: H1 2026
HM Treasury, FCDO and OFSI announce move to single list - UK sanctions designations
The FCDO, OFSI, and HM Treasury have announced that from 28 January 2026, the UK will move to a single list of sanctions designations.
Key Points:
The current two lists:
UK Sanctions List (UKSL) – maintained by the FCDO
OFSI Consolidated List – maintained by OFSI for HM Treasury
These will be consolidated into the UKSL, which will become the sole authoritative source for UK sanctions designations.
Businesses and compliance teams are advised to:
Use the UKSL as the primary source of sanctions data now, and no later than 28 January 2026.
Review the published guidance to prepare internal systems and controls for the change.
Financial Services Skills Commission publishes call for evidence - AI and financial services
The Financial Services Skills Commission has launched a call for evidence to explore how AI and disruptive technologies will impact the UK financial services workforce over the next 5 to 10 years.
This forms part of research commissioned by HM Treasury under its Financial Services Growth and Competitiveness Strategy.
The evidence will inform long-term planning for skills and workforce transformation across the sector.
A series of regional roundtables will take place throughout November 2025 to gather insights from stakeholders. Deadline for responses: 26 November 2025.
OPEN BANKING & OPEN FINANCE
FCA Launches Partnership and TechSprints to Drive Open Finance
The FCA has announced new initiatives to accelerate the development of open finance, following its January 2025 letter to the Prime Minister.
Key Highlights:
New Partnership:
The FCA is partnering with Raidiam, a global data-sharing tech firm, to support the Smart Data Accelerator. Firms will be able to simulate and test data sharing in Raidiam’s secure environment.
TechSprints Announced:
Two TechSprints will run from 17 November 2025 to 12 February 2026, focused on:
Mortgages
SME finance
Registration Deadline:
Firms can register to participate until 2 November 2025.
FCA publishes research note - UK open banking and open finance
The FCA has released a third-party research note examining the state of open banking in the UK and exploring the potential development of open finance. The findings aim to inform a future strategic framework but do not represent FCA policy.
Key Insights:
Open banking has shown steady but gradual growth.
Open finance is expected to evolve similarly, requiring:
Early regulatory alignment
Commercially viable incentives
Investment in shared infrastructure
FCA Next Steps:
Two TechSprints launching in Autumn 2025:
Focused on SME finance and mortgages
Exploring smart data use cases across sectors and internationally
Publishing an Open Finance Roadmap by March 2026
Research Note: Open banking and open finance in the UK
INVESTMENT SERVICES
FCA publishes policy statement (PS25/14) - Definition of capital for FCA investment firms
The FCA has finalised new rules to simplify and clarify the definition of ‘own funds’ (regulatory capital) for investment firms under the MIFIDPRU 3 regime.
Key Points:
Removes references to UK CRR: All cross-references to the UK Capital Requirements Regulation (UK CRR)will be removed.
Standalone framework: Establishes a tailored definition of capital specifically for FCA investment firms.
No change in capital levels: The reforms do not alter capital requirements or force firms to change their existing capital structures.
The new rules will come into force on 1 April 2026.
FCA publishes Dear Compliance Officer letter - Moving to T+1 securities settlement
The FCA has issued a Dear Compliance Officer letter to firms in its Asset Management and Alternative Firms portfolio, outlining expectations ahead of the UK’s transition to a T+1 securities settlement cycle, effective 11 October 2027.
Key Expectations for Firms:
Review AST Final Report:
Firms should familiarise themselves with the recommendations in the Accelerated Settlement Task Force Final Report (Feb 2025).
Project Planning:
Firms must develop a clear project plan to move to T+1 settlement by October 2027.
Operational Readiness:
Conduct end-to-end reviews of trading, clearing, and settlement processes.
Engage with settlement agents to ensure readiness for T+1 timelines.
Implementation Timeline:
By end of 2026: Key changes should be implemented.
In 2027: Firms are expected to test amended settlement processes to ensure full readiness for the T+1 go-live date.
FCA - Dear Compliance Officer Letter
PENSIONS
FCA publishes CP on consequential changes - Proposals for targeted support for pensions and retail investment decisions
The FCA has published CP25/26, proposing consequential changes to its Handbook to support the new targeted support framework for pensions and retail investment decisions, previously consulted on in CP25/17 (June 2025).
Key Points:
The new framework will allow firms to offer non-personalised suggestions to groups of consumers with shared characteristics, helping them make informed financial decisions.
CP25/26 sets out changes to ensure this targeted support model aligns with existing rules, especially those relating to pension choices and retail investment advice.
The consultation closes on 17 October 2025. Final rules & feedback (on CP25/17 and CP25/26) is set to be published in December 2025.
CP25/26: Consequential Handbook changes following the proposals in CP25/17
MOTOR FINANCE
FCA publishes consultation paper - Motor finance consumer redress scheme
The FCA has proposed an industry-wide redress scheme to compensate consumers who were treated unfairly under motor finance agreements involving undisclosed commission arrangements between lenders and brokers.
Key Details:
Scope:
Covers regulated motor finance agreements entered into by consumers between 6 April 2007 and 1 November 2024, where commission was paid by the lender to the broker.
Focus:
Whether firms adequately disclosed commission arrangements and contractual ties between brokers and lenders.
Coverage & Cost:
Estimated to apply to 44% of agreements since 2007.
Potential cost to the industry: £11 billion.
Average redress: £700 per agreement.
No de minimis threshold is proposed.
Who’s Affected:
Both lenders and brokers would be subject to the proposed rules.
Consultation Deadlines:
Main redress scheme consultation closes:
18 November 2025
Separate proposal to extend firms' time to respond to complaints (from 4 Dec 2025 to 31 July 2026):
Comments due by 4 November 2025
(excludes complaints about leasing agreements)
Next Steps:
If confirmed, final rules and policy statement expected early 2026.
Scheme launch and compensation payments would follow later in 2026.
FCA publishes Dear CEO letter - Expectations for motor finance lenders and brokers
The FCA has written to all lenders and brokers involved in motor finance since 2007, urging them to begin preparing now for a potential industry-wide redress scheme, regardless of the consultation outcome.
Key Expectations:
For Lenders:
Identify affected customers and plan to address any data gaps.
Conduct due diligence on acquired loan books to assess potential redress liability.
Strengthen systems and controls to enable accurate, large-scale redress delivery.
Avoid actions that could delay redress, e.g. asset transfers or group restructuring to limit liabilities.
For Brokers:
Identify which lenders were used.
Review document types and volumes held on historic deals.
For All Firms:
Senior managers must take responsibility for readiness.
Notify the FCA of any material issues affecting ability to meet obligations.
Be prepared for the FCA to take action against firms failing to cooperate or adequately prepare.
The FCA has committed to supporting firms during this process and will take a pragmatic and proportionate approach, but warns it will use its full regulatory powers where necessary.