UK Regulatory Radar

Berne Financial Services Agreement: Earlier this month, UK and Swiss regulators signed a Memorandum of Understanding underpinning the Berne Financial Services Agreement (BFSA). The BFSA offers a great opportunity to UK and Swiss FS sectors to deepen their presence in each other’s markets and is based on mutual regulatory deference. It is particularly significant for insurers, brokers, and private banking and wealth management firms. Read the article above to find out more about the Berne Agreement and how to avail yourself of its key benefits.

FOS case fees: The FOS is consulting on reforms to its case fee structure, with proposals that would see firms pay less for complaints which are resolved earlier in the investigation process. The initiative forms part of the FOS's broader transformation programme aimed at modernising its service and funding model, ensuring it remains free for consumers, charities and others acting on their behalf.

SM&CR reporting: The FCA has updated its annual conduct reporting requirements for solo regulated firms, removing the need to submit nil returns. Firms with a reporting period after 31 August that have not undertaken disciplinary actions for conduct rule breaches will not be required to submit a report. This change forms part of the FCA’s broader programme aimed at transforming data collection and making reporting more proportionate and is expected to benefit 36,000 firms.

FCA quarterly consultation 49: The FCA's latest quarterly consultation paper proposes changes to various elements of its Handbook. This quarter’s amendments cover a wide range of regulations and topics including changes to the Retail Mediation Activities Return (RMAR) reporting frequency, the removal of regulatory contactless limits, implementation of the Berne Financial Services Agreement, amendments to the Sustainability Disclosure Requirements, and UK Listing Rules amendments to align the timing and frequency of post-trade share buy-back notifications with those under the under the Market Abuse Regulation.

Handbook Notice 132: The FCA’s latest Handbook Notice confirmed changes to the handbook in a number of areas following consultation. The updates related to topics such as non-financial misconduct, the FCA’s fees, the listing rules, the mortgage rule review, the distribution of cryptoasset ETNs, and EMIR reporting.  

FCA access to cash update: One year on from the introduction of the revised access to cash rules, 121 banking hubs have been opened, 20 of which were established following requests from local communities for their cash provision to be assessed. In addition, 93 cash deposit services have been set up. Later this year the FCA will engage with stakeholders on what is working well, and how else access to cash can continue to improve.

Deletion of reporting templates: The PRA and BoE have published three consultations supporting their goal of reducing the regulatory reporting burden on firms. PRA CP21/25 – part of the Future Banking Data review – is focused on bank reporting and proposes to eliminate 37 templates, 34 of which relate to financial reporting (FINREP). The PRA also proposes to delete three obsolete COREP templates. The PRA’s aim is to remove templates which are “no longer necessary to support its work or are already available elsewhere”. The consultation closes on 22 October and resulting changes would apply from 31 December. The BoE is consulting separately on the removal of certain resolution and statistical reporting templates.

Discussion Paper on Foundation IRB approach for residential mortgages: PRA Discussion Paper (DP) 1/25 sets out potential revisions to the way residential mortgage exposures may be treated under the Internal Ratings Based (IRB) framework, and is aimed particularly at firms that have long struggled to meet the complex requirements around Loss Given Default (LGD) and Probability of Default (PD). To make IRB more accessible, particularly for medium-sized firms, the PRA is exploring a Foundation IRB (FIRB) approach for mortgage exposures. As for non-retail portfolios, under FIRB, firms would still model PD, but LGD and Exposure at Default (EAD) would be set using supervisory values. The DP closes on 31 October.

O-SII buffer rates for ring-fenced banks and large building societies: The PRA has confirmed its decision to index O-SII buffer rate thresholds, following completion of the FPC’s review, and reissued the 2024 buffer rates to reflect the updated framework. The revised buffer rates will apply from 1 January 2026

Funded Re and BPA market: Vicky White, Director for Prudential Policy, delivered a speech on the PRA's evolving approach to Funded Reinsurance (including potential for policy change), including views on the Bulk Purchase Annuity (BPA) landscape and potentially extending the insurance Special Purpose Vehicle (iSPV) regime to accommodate life insurance business. This will be of interest to life insurers, particularly annuity writers.

Insurance third-country branches: The PRA is consulting on further changes for insurance third-country branches. Some of the proposals would streamline the rules (e.g., removal of quarterly reporting for most branches without having to seek ‘modification by consent’ first), while others would clarify expectations (e.g., on ORSAs and resolution plans) or add further expectations (e.g., two annual templates are reinstated for most branches). The PRA also proposes to increase the threshold for subsidiarisation from £500m to £600m.

UK Insurance Special Purpose Vehicles: PRA policy statement (PS) 9/25 includes final policy and feedback on responses to CP15/24 on changes to the ISPV regulatory framework. There is a new accelerated pathway for certain UK ISPV applications, where approvals can be issued within 10 working days. There are also changes to streamline the application and approval process, and to simplify PRA and FCA Senior Management requirements for all UK ISPVs. 

Market Watch 83: In Market Watch 83, the FCA has shared observations from recent 'deep-dive' reviews of corporate finance firms. The reviews focused on firms' systems and controls for handling inside information and aimed to address the heightened risk of market abuse in firms providing advisory and corporate broking services to small and mid-cap companies. The FCA expects firms to use these observations to benchmark their arrangements and improve market conduct.

Algorithmic trading: The FCA reviewed a sample of principal trading firms to assess their compliance with MiFID Regulatory Technical Standards (RTS) 6 and identify any areas of weakness in firms’ algorithmic control frameworks. The output of the review outlines good practices among algorithmic trading firms. The observations made by the FCA during the review are grouped under four key themes: Governance, Development and Testing, Controls and Market Abuse Surveillance.

Benchmark administrators’ data quality controls: The FCA has shared findings from its multi-firm review of how benchmark administrators manage data risks. The review was launched due to the FCA's concerns with firms’ data quality controls, identified through supervisory work, which exposed weaknesses in firms’ data ingestion and monitoring controls. Although there were some good arrangements in evidence at each firm, the overall picture was of varied practices which didn’t consistently support a robust control environment. The publication includes wider lessons for the sector and next steps.

Off-channel communications: The FCA has published the findings of its review on firms’ approaches to off-channel communications. As part of the review the regulator surveyed 11 wholesale banks and found that all of the firms included in the review were able to evidence action taken to improve their approach to off-channel communications to varying degrees. However, most firms continue to identify breaches of their internal off-channel policies demonstrating the importance of firms also focussing on improvements in behaviour and not just in detecting off-channel communications.

Transaction governance: The FCA’s multi-firm review of transaction governance in wholesale banks found no widespread weaknesses. However, it highlighted variations in the robustness of processes, especially around reputational risk, and reminded firms of their obligations in categorising and handling inside information.

Appointed representatives: HMT has confirmed its intention to retain the Appointed Representatives (AR) regime in its current form, while introducing targeted and proportionate reforms to strengthen oversight and build confidence in the framework. The changes aim to ensure the regime continues to deliver benefits to consumers and businesses, while addressing concerns about poor oversight and consumer risk in some cases. A formal consultation on the detailed proposals will follow in due course.

Customer journey design: The FCA has published findings on the design of digital acquisition journeys and customer outcomes. It notes that when designed well, journeys support good consumer outcomes, but that inadequate design can result in rushed or uninformed decisions that may not be in customers' best interests. The report identifies good practice and improvements in four areas: design, different customer groups, testing and quality assurance, and management information and oversight. Good practices observed included journeys tailored to the product or service’s target market, the use of friction to drive informed decision making, and the use of plain language and clear layouts. Whilst the findings directly relate to consumer credit providers, they should be of interest to all firms with online customer journeys.

Motor finance commission: Following the decision of the Supreme Court in August on the relevant motor finance commission cases, the FCA announced its intention to consult on a statutory redress scheme. The consultation, expected early October 2025, will propose a framework for compensating consumers affected by non-disclosure of commission arrangements on motor finance products. The Supreme Court judgment provided legal clarity around circumstances that may give rise to an “unfair relationship” under the Consumer Credit Act (CCA) – for more see here. The FCA also issued a formal letter to Claims Management Companies (CMCs) highlighting concerns over non-compliant financial promotions related to motor finance claims. The FCA has asked all authorised CMCs involved in these claims to review their advertising content urgently to ensure that it is fair, accurate and compliant with relevant FCA rules. This supervisory action follows a rise in consumer complaints, speculative redress estimates and heightened legal scrutiny in the motor finance space.

Operational resilience for cryptoasset firms: FCA consultation paper (CP) 25/25 includes proposals to apply the existing operational resilience framework to cryptoasset firms, including the requirements and standards in SYSC 4, 7, 8 and 15A. The FCA notes that the particular characteristics  of cryptoassets introduce “specific challenges” and explores how firms might approach important business services, impact tolerances, outsourcing and third-party expectations, cyber and technology resilience, the safeguarding of cryptographic keys and infrastructure, and continuity and disruption planning. See also Digital Finance.

Thematic findings from the 2024 Cyber Stress Test: The BoE has shared key findings from the 2024 Cyber Stress Test (CST24), covering firms’ understanding of the potential financial stability impacts of operational disruption and how these might be mitigated – including operational, financial and confidence mitigation. The BoE acknowledges the commitment of test participants who have already started to work on the findings and notes that it expects all firms to consider the implications for their own businesses, and integrate lessons learned into “a cycle of continuous improvement”.

FCA Cyber Coordination Group Insights: The FCA has published a summary of discussions with industry members of its Cyber Coordination (CCG) programme. The publication does not introduce any additional regulatory expectations but has been made available for firms’ consideration so that they can learn from each other help to strengthen their cyber resilience capabilities. Discussion topics included third-party incident management, threat and vulnerability management, threat-led penetration testing, and AI and emerging technologies.

AI live testing: The FCA’s AI live testing paper received strong support from across the industry with firms viewing it as a key enabler for safe and effective AI use. Respondents welcomed the pilot’s potential to reduce proof-of-concept barriers, offer regulatory assurance and foster trust in AI deployment. Respondents also suggested the FCA could further help firms’ AI adoption with improved model evaluation and outcome monitoring and better stress-testing for AI systems. Additionally, firms highlighted that AI live testing could help define what responsible bias mitigation looks like. The first cohort is live and the FCA plans to open applications for the second cohort before the end of 2025. The FCA will publish learnings and use results to inform future regulatory development.

Synthetic data governance: The FCA’s Synthetic Data Expert Group (SDEG) has published its final report setting out governance guidance to support responsible adoption of synthetic data in financial services. Synthetic data, which is artificially generated to replicate real-world data sets, is seen as a key enabler of innovation by allowing firms to develop and test models without relying on sensitive information. The report outlines nine guiding principles including accountability, fairness and explainability and encourages alignment with existing risk and ethical frameworks. Without strong governance, the use of synthetic data could lead to bias, unfair outcomes or reduced model performance. Firms are urged to embed synthetic data into their governance frameworks, maintain clear documentation and establish oversight across compliance, ethics and technical teams.

Lifting of ban of retail access to crypto ETNs: The FCA has announced that from 8 October 2025, firms will be able to offer retail customers access to crypto ETNs (cETNs) where these are traded on a UK Recognised Investment Exchange (RIE). These products will be subject to the Conduct of Business sourcebook (COBS) and financial promotion rules (including marketing restrictions such as risk warning requirements). The Consumer Duty will apply to the firms offering cETNs to retail customers. The FCA’s ban on retail access to cryptoasset derivatives will remain in place.

Proposals for good business practices for crypto firms: The FCA has published proposals for the application of its Handbook to regulated cryptoassets activities. CP25/25 outlines proposals for the minimum standards crypto firms will be required to comply with in relation to the Senior Managers & Certification Regime, financial crime, operational resilience and ESG. In addition, the paper invites discussion on the application of the Consumer Duty to cryptoassets – noting that defining the appropriate protection and achieving secure outcomes for consumers in relation to cryptoasset activities faces specific challenges due to their nature. It also considers whether customers should be able to bring complaints to the Financial Ombudsman and if FCA complaint handling rules should apply. The paper follows a number of additional consultation and discussion papers pertaining to cryptoassets which the FCA has published this year as it prepares to publish final rules in 2026.

TCFD disclosures: The FCA has reviewed the TCFD disclosures of asset managers, life insurers and FCA-regulated pension providers. In the main, the disclosure requirements have supported firms' consideration of climate-related risk and their integration into decision-making – however some have found it challenging to meet the requirements. In light of the findings, the FCA plans to consider how it could simplify and streamline aspects of its sustainability reporting framework.

Sustainability-linked loans market: The FCA has published an update on the sustainability-linked loans (SLL) market. The FCA notes that key performance indicators (KPIs) are now more relevant, and sustainability performance targets (SPTs) are fewer, more material and strategically aligned with borrowers' businesses. Banks are starting to face reputational risks due to unclear articulation of the way SLLs are accounted for in sustainable financing targets, and they are shifting to a more client-focused approach, assessing suitability for SLLs based on client readiness. Barriers such as high reporting costs and large loan sizes still prevent small and medium-sized firms from using SLLs. The FCA encourages banks to support client capacity development and emphasises the need for clear governance processes.

Transition plan template for occupational pension schemes: TPR will work with industry stakeholders to develop and test a voluntary template for transition plans. The template will draw on the work of the UK Transition Plan Taskforce (TPT) and will be tailored specifically to occupational pension schemes. Transition plans are not currently mandated for occupational pension scheme providers, but their use can help providers manage transition risks, capitalise on investment opportunities and prepare for the government's goal of transitioning the UK to a net zero nature-positive economy by 2025. TPR will present the template to the Department for Work and Pensions later this year.

Minor amendments to SDR: The FCA has proposed minor amendments in CP25/24 to its Sustainability Disclosure Requirements (SDR) – see also Cross Sector section. The proposals include clarifying the policy intention where index-tracking funds use a label, confirming the timeline for product-level reports, and giving fund managers more flexibility around the length of reporting periods for ongoing product-level reports to enable alignment with other reporting cycles.

Safeguarding: The FCA has published final rules to strengthen customer fund safeguarding within payment and e-money institutions. This follows a series of firm failures, where average shortfalls of 65% of customer funds were observed – prompting the FCA to act to protect consumers more effectively and increase trust in the payments sector. The new regime, confirmed in Policy Statement PS25/12, will take effect from 7 May 2026 following a nine-month implementation window.

Open banking standards: The FCA has published FS25/4 outlining the design and role of the ‘Future Entity’ – the new industry-led standards body for open banking in the UK. This entity is expected to play a central role in setting, maintaining and overseeing open banking API and operational standards as the ecosystem moves into its next phase of development. The FCA will work with industry to stand up the Future Entity in the coming months.

Payments system regulation: HMT is consulting on the approach to consolidating the PSR within the FCA. HMT proposes the FCA should take on the PSR’s responsibilities, including for promoting competition and innovation in payment systems and the services provided by payment systems, as well as supporting the interests of consumers and businesses. HMT intends to integrate the PSR’s functions within FSMA 2000 where practicable, retain the current designation regime and regime scope with no new regulated activities created, and preserve key definitions. The FCA’s powers will be largely equivalent to those of the PSR. The roles and responsibilities of the Bank of England and PRA will be maintained.

Market report on administrator relationships: The results of TPR’s year long engagement with a number of pension administrators has found encouraging signs of progress, with many administrators becoming more strategic and resilient. However, more work is required to meet TPR’s expectations. TPR found that challenges remain, particularly around changes to regulatory requirements, technology, staffing, data, and cyber security. To keep improving, TPR expects administrators to make further investments, improve data quality, strengthen cyber expertise, incorporate risk and change management into daily operations, and further strengthen oversight.

Pension transfers: The FCA’s multi-firm review of pension transfers across 18 life insurers found that most transfers were completed within 20 days, with digital platforms such as OTS supporting faster processing. While firms generally acted with good intent, the review highlighted outliers with slower service, raising concerns under the Consumer Duty. Fraud prevention checks, including amber and red flags, were applied in a small minority of cases but remain critical safeguards. The FCA expects firms to balance speed with protection, avoid unreasonable barriers, and ensure customers receive good outcomes when transferring pensions.

Transition plan template for occupational pension schemes: See ESG and Sustainability