Financial services

Contact: Jonathan Cary and Matthew Griffith

Financial services

FCA provides update on enforcement transparency proposals

The Financial Conduct Authority (FCA) has published a letter to the Treasury Select Committee reporting improved investigation speed and outlining its enforcement transparency approach. After consultation, the FCA will maintain its 'exceptional circumstances' test for announcing investigations into regulated firms rather than adopting a proposed 'public interest' test, due to insufficient consensus.

The FCA will implement broadly supported changes including reactive confirmation of publicly known investigations, notifications about potentially unlawful activities by unregulated firms, and anonymous publication of investigation details. Final policy is expected by the end of June 2025. Additionally, the FCA and Prudential Regulation Authority have halted their diversity and inclusion proposals following feedback. The FCA continues work on non-financial misconduct with next steps expected by June 2025.

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FCA consults on potential removal of £100 contactless limit

The Financial Conduct Authority (FCA) is consulting on proposals to remove or increase the current £100 contactless payment limit in the UK. This initiative, part of the FCA's January commitment to support economic growth, and aims to benefit consumers, businesses and merchants through greater flexibility and smoother transactions.

The regulator suggests that less prescriptive regulation could give payment firms more control and encourage innovation in payment methods and fraud prevention. One option being considered would allow firms with strong fraud controls to set their own limits, similar to practices in the United States. The FCA emphasises that consumer protection remains paramount, with existing legislation on unauthorised payment fraud reimbursement to remain in place. Public feedback on these proposals closes on 9 May 2025.

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Financial services

HM Treasury releases draft SI and policy note on MiFID organisational regulation

HM Treasury is publishing a near-final draft of a Statutory Instrument (SI) to reform the Markets in Financial Instruments Directive Organisational Regulation, fulfilling part of Chancellor's Mansion House 2024 commitments to enhance UK capital markets' attractiveness.

The government plans to restate elements defining regulatory activity whilst revoking firm-facing provisions, transferring these responsibilities to the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). This approach allows these expert regulators to develop more tailored rules based on their supervisory experience.

The draft SI maintains sections to be preserved in legislation, with the FCA and PRA expected to implement replacement rules in the second half of 2025. Technical feedback on the draft is invited until 14 April 2024.

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FCA launches a market study into the pure protection market

Having committed to reviewing the pure protection market in August 2024, the Financial Conduct Authority (FCA) has now launched its market study alongside updated terms of reference. The focus is on fair value and commissions which is notable given that by the time the FCA publishes its findings we are likely to have both the Supreme Court decision in the MotoNovo Finance case and the Court of Appeal's decision in a judicial review of a FOS decision in the motor vehicle finance sector and the operation of discretionary commission arrangements. The market study will also be the FCA's first deep dive into the distribution aspects of the Consumer Duty in relation to in-scope products.

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Financial services

HM Treasury seeks views on Alternative Investment Fund Managers Regulations

HM Treasury has launched a consultation on proposed amendments to regulations governing Alternative Investment Fund Managers. Running until 9 June 2025, the consultation outlines plans to streamline these regulations to make operations simpler and more cost-effective for most asset managers in the UK.

The government aims to enhance the UK's appeal as an asset management hub and support economic growth by simplifying the regulatory framework whilst maintaining essential consumer and market protections. The proposals include removing detailed firm-facing requirements from legislation, allowing the Financial Conduct Authority (FCA) to develop more proportionate rules tailored to firms' specific circumstances.

The consultation is accompanied by an FCA Call for Input on their proposed approach to detailed rules for fund managers.

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