Financial services

Contact: Jonathan Cary and Matthew Griffith

Financial services

FCA and PSR outline future of open banking

The Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have announced plans to advance open banking in the UK through the establishment of a new independent company focused on variable recurring payments. The UK's open banking initiative has shown remarkable success, with 11.7 million active users and over 22.1 million monthly transactions. Significant developments in 2024, supported by funding from 20 leading firms, included enhanced fraud analysis, improved consumer protections, and new services. Variable recurring payments will offer consumers greater control over regular payments by allowing them to set spending limits, whilst businesses may benefit from reduced processing fees and improved payment completion rates. The initiative will prioritise implementing these payments for utilities, government services, and financial firms throughout 2025, with Open Banking Limited playing a central coordinating role.

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FCA portfolio letter highlights priorities for the next two years

The Financial Conduct Authority (FCA) issued a portfolio letter on 7 October, outlining its priorities for the next two years for the finance advice and investment intermediary market. In our recent article, Rachael Healey explores the priorities outlined in the FCA's letter, with highlights including retirement income advice, and a continued focus on the expectations around the consumer duty. The letter also confirms that we can expect a further update from the FCA on its review of the retirement income advice market in the first quarter of 2025 and an update on ongoing advice services later this year.

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FCA and Practitioner Panel survey: regulated firms' views requested

The Financial Conduct Authority (FCA) and Practitioner Panel have launched their 2025 joint survey for all regulated firms. Conducted by Verian, the independent survey seeks feedback on the FCA's regulatory practices. This year, all regulated firms are invited to participate, broadening the range of feedback received. The FCA uses survey results to identify areas for improvement and assess its performance against strategic objectives. Results will be published in summer 2025. The FCA has also outlined actions taken in response to 2024 survey feedback, including measures to support business growth, overhaul of the UK listing rules and improved data submission processes.

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Financial services

Navigating PRA's data request for crypto-asset exposure

The Prudential Regulation Authority (PRA) issued a data request to identify firms' current and expected future crypto-asset exposures. This request also asks for information on the firms' application of the Basel framework for the prudential treatment of crypto-assets exposures, that was published in December 2022, following its second consultation on banks' exposures to crypto-assets. RPC discusses the request, and what implications may arise for financial institutions and their insurers.

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Regulators support government growth objective and aim to reduce regulatory burden

Following the Autumn Budget, HM Treasury launched a call for evidence which outlined the government's plans for its Financial Services Growth & Competitiveness Strategy. The Strategy will set the government's approach to the financial services sector for the next ten years and will serve as the framework through which the government will deliver sustainable, inclusive growth for the sector and secure the UK's competitiveness as an international financial centre. The call for evidence sets out five core policy pillars which the government says are central to the sustainable growth of the sector. These are:

innovation and technology
regulatory environment
skills and access to talent
regional growth
international partnerships and trade.

The government also highlighted several key priority growth opportunities, including the London insurance and reinsurance markets.

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Acceptable levels of consumer harm – the FCA seek guidance in balancing risk with reward

On Christmas Eve 2024, the Chancellor, Business Secretary and Prime Minister wrote to 17 different regulators in the UK, ordering them to put forward pro-growth proposals. However, the head of the FCA has warned that such growth will come with risks that the government must be alive to. Speaking on the issue on 22 January, the head of the FCA warned that more could go wrong because of these demands to slash regulations and has asked that the government clearly outline what they feel is an acceptable level of harm to consumers.

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Financial services

FCA reveals its new strategy for supervision of wholesale brokers

The Financial Conduct Authority (FCA) published a portfolio letter setting out their new strategy for supervising wholesale brokers. The letter notes the role that wholesale brokers play in sourcing liquidity, providing market access for their clients and in matching buyers and sellers. The letter goes on to note that the market faces persistent headwinds and has seen a degree of consolidation as larger firms are better able to benefit from current market conditions.

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