Financial services

Contact: Jonathan Cary and Matthew Griffith

Financial services

FCA publishes major changes to UK listing rules

The Financial Conduct Authority (FCA) has finalised significant changes to the UK listing rules, the most substantial overhaul in over 30 years. Aimed at fostering growth and innovation, the new rules simplify the listing process with a single category and streamlined eligibility for companies seeking to list shares in the UK. This aligns the UK with international standards and maintains necessary investor protections. The revisions eliminate votes on significant transactions while retaining shareholder approval for major events like reverse takeovers. The new rules took effect from 29 July 2024.

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FCA introduces sustainable investment labels

The FCA's new sustainability labelling regime took effect on 31 July 2024. The FCA has published four investment labels (which are now available to download on its website) to help asset managers more consistently and transparently describe the sustainability credentials of their investment funds. The labels are intended to clarify the differences between different types of sustainable investment and include: “sustainability mixed goals”, “sustainability improvers”, “sustainability impact” and “sustainability focus”. Firms will have to comply with specific criteria to be able to use these labels (available here). Firms must notify the FCA when using an investment label through the form on the FCA's online notification and applications system.

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FCA outlines new rules to strengthen UK wholesale markets

The FCA has announced a series of measures to strengthen UK capital markets. Key proposals include establishing a new Public Offers and Admissions to Trading Regime (POATR) to replace the UK Prospectus Regulation, potentially reducing costs for companies raising additional capital. The FCA is also proposing new public offer platforms to provide an alternative capital-raising route for smaller companies. Additionally, the FCA has confirmed rules allowing asset managers more flexibility in paying for investment research. These changes aim to improve market competition and align with international regulations. The package also includes a consultation on derivatives trading obligations to enhance secondary market regulation and reduce systemic risk. These measures are designed to bolster the UK's position as a global financial centre while ensuring appropriate investor protection.

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Financial services

FCA outlines strategy to ensure cash availability for consumers and small businesses

The FCA has announced new rules to protect access to cash services for consumers and small businesses in the UK. From 18 September 2024, designated banks and building societies will be required to assess local cash access needs, respond to community requests for evaluations, and provide additional services where significant gaps are identified. These measures aim to maintain essential cash facilities, including bank branches and ATMs, until alternative services are available. The FCA's powers don't prevent branch closures but will address resulting gaps in cash access. Possible solutions include banking hubs, ATMs, and Post Office facilities. The FCA has adjusted the proposed rules, allowing more time for assessments and periodic reviews of new services. Recent research highlights that low-income households and those with limited digital capabilities are most reliant on cash services.

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FCA review of Consumer Duty outcomes monitoring across the insurance industry

On 26 June 2024, the FCA published its findings from a multi firm review of the insurance sector's ongoing monitoring of outcomes under the Consumer Duty. Some firms were able to demonstrate good practice, with the FCA noting that they had been able to show a clear causal chain from the setting of clearly defined customer outcomes, monitoring of those outcomes, identification of poor outcomes and appropriate action then being taken. They were also critical of firms who focused on processes being complied with rather than the outcomes actually being delivered. In some cases, there was noted to be an absence of clear evidence that monitoring of outcomes had led to proactive action to improve those outcomes.

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Potential deregulation and a pragmatic approach to commercial insurance – welcome news from the FCA

The FCA has published a discussion paper seeking feedback on its rules on commercial insurance, including in respect of the types of commercial customers in-scope of such rules, co-manufacturing of products and bespoke insurance products. In our latest blog we look at the potential changes to the classification of commercial insureds and scope of regulation which should apply to them, and we will follow up on the other points covered in DP24/1.

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The FCA's new anti-greenwashing rule

With sustainability under increasing scrutiny, the FCA has introduced an anti-greenwashing rule which prevents firms from exaggerating their green and social credentials. To avoid regulatory action and civil claims, its crucial that firms understand how to comply.

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