PRA sets out proposed changes to the depositor protection rules 

On 31 March 2025, the PRA published a consultation paper (CP4/25), containing proposals to:

• raise the Financial Services Compensation Scheme (FSCS) deposit protection limit from £85,000 to £110,00. The current limit has been in place since January 2017. Since the UK's departure from the EU, the PRA is required to review the deposit protection limit at least every five years. It is proposed that the new limit would apply from 1 December 2025. Any change would require HM Treasury's approval.

• increase the limit that applies to certain temporary high balance claims from £1 million to £1.4 million. This protection has been in place since July 2015. Under the PRA's proposals, the new limit would also apply from 1 December 2025.

• review certain disclosure materials relating to the deposit protection limits and provide firms with a six-month transitional period until 31 May 2026 to amend disclosure materials to reflect the new limits.

• make new rules to enable the FSCS to fulfill new functions to be given to it under the Bank Resolution (Recapitalisation) Bill (Bill). The Bill provides the Bank of England with a toolkit to respond to bank failures and aims to address the lessons learnt from the volatility in the UK banking sector in 2023, particularly in relation to Silicon Valley Bank UK. For background on the Bill, see our August 2024 update and for information on its progress, see a House of Commons briefing published in March 2025.

The consultation closes on 30 June 2025 for the proposals relating to the FSCS protection limits and on 30 April 2025 for the proposals relating to the Bill.

The PRA aims to publish a policy statement regarding the changes to the FSCS protection limits in November 2025. The timing of the policy statement relating to the proposals relating to the Bill will depend on when the Bill receives Royal Assent.

FCA announces launch of 'My FCA' portal for regulated firms in Spring 2025 

On 31 March 2025, the FCA announced that registered and authorised firms can now access 'My FCA', a new portal designed to make fulfilling regulatory responsibilities easier. The system consolidates three previously separate systems (Connect, RegData and Online Invoicing System) into a single sign-in platform for submitting regulatory data and paying fees. It marks a key milestone in the Transforming Data Collection programme, which is a joint venture between the FCA and the BoE, and also reflects the FCA's commitment in its 2025-30 strategy (see below) to be a smarter regulator.

FCA publishes its new five-year strategy

On 26 March 2025, the FCA published its strategy for 2025-2030.

It has set itself four priorities:

• Be a smarter regulator - the watchwords are "predictable, purposeful and proportionate". Technology will be key to how it can do more, faster.

• Support growth - it will do this by enabling investment and innovation and ensure that the UK maintains its competitiveness as a global leader in financial services.

• Help consumers navigate their financial lives by reviewing FCA rules to ensure product innovation and widened access, and working with industry so that people get the support and information they require.

• Fight crime with a focus on those who use their regulated status to do harm. It will also go further to disrupt criminals and support firms to be an effective line of defence.

Please see the Payments section below, for a discussion of the payments related aspects of the strategy.

UK government Action Plan

On 17 March 2025, the UK government published an Action Plan in a bid to overhaul the UK regulatory system so that regulators and regulation supports growth. Please see our article, Lights, camera, regulatory action!, which covers the financial services aspects of the Action Plan.

UK Finance proposes reforms for UK financial services sector within Plan for Growth

On 17 March 2025, UK Finance published a Plan for Growth proposing reforms to help the UK financial services sector make a stronger contribution to the government's growth agenda, alongside benefiting consumers, business and society.

The Plan for Growth identifies reforms that can be undertaken immediately, those achievable in the short term and those that can be delivered over the course of the current Parliament. It sets out steps for the government and regulators to deliver the following objectives:

• Create a pro-growth operating environment, including by simplifying and clarifying the regulatory architecture, streamlining conduct regulation, reforming prudential regulation to support economic growth and revitalising the UK's approach to international trade.

• Ensure the financial system is fit for the future, by delivering world class payments, modernising the UK's capital markets and fighting economic crime more holistically.

• Unlock financial services for consumers, businesses and society, by supporting business growth, ensuring more inclusive financial services and supporting the net zero transition.

New FCA webpages on applying for senior management functions

On 12 March 2025, the FCA published two new webpages to help firms applying for individuals to hold senior management functions under the senior managers regime.

The first webpage provides an overview of the application process, covering the evidence firms need to submit and the information required in the application form. It shows what a good application looks like and gives reasons why an application might be delayed.

The second webpage provides greater detail on the evidence the FCA expects and gives examples of cases where the FCA may have concerns on a candidate's fitness and propriety (and the related due diligence it might expect from a firm). The examples relate to:

• executive director candidates with potential integrity, reputation and competency issues

• international candidates moving to the UK to be an SMF16 (compliance oversight function) in a firm with significant compliance issues

• chair candidates with a non-financial services background residing overseas, during business transformation

• partner candidates with financial soundness issues

• consolidator firms applying for an individual to have multiple roles at different entities.

FCA and PRA update on diversity and inclusion proposals

On 12 March 2025, the FCA and the PRA announced in letters to the House of Commons Treasury Committee that they will not be taking their proposals aimed at improving diversity and inclusion (D&I) in firms any further. Having consulted on proposed rules aiming at improving D&I in firms in September 2023 (see our October 2023 update), the regulators received a broad range of feedback, including the Committee's strong reservations about the reporting aspects of the proposals. Other reasons for not taking their proposals forward include:

• expected legislative developments in the area, including on gender action plans and disability and ethnicity pay gap reporting

• wanting to avoid additional regulatory burdens on firms.

The FCA also confirmed that it intends to set out next steps for its plan to tackle non-financial misconduct by the end of June 2025.

The letters also refer to the FCA and PRA review of the impact of removing the bonus cap on gender pay and inequality and that this work will likely occur during the 2026/27 financial year, given the time it will take for firms to make changes.

FOS quarterly complaints data on financial products and services: Q3 2024/25

On 4 March 2025, the Financial Ombudsman Service (FOS) published quarterly complaints data on financial products and services for the period October to December 2024. The FOS received 68,430 complaints (a 40% rise compared to Q3 2023/24).

The most complained about product was hire purchase (motor) with 15,956 complaints, almost three times the number compared to Q3 2023/24. Concerns relating to motor finance commission have caused the increase in both hire purchase (motor) and conditional sale (motor) complaints.

The FOS's press release refers to the following issues arising:

• The customer was not informed that the car dealer would receive a commission from the finance provider for arranging the financing. 

• The arrangement of the car finance agreement was alleged to be unfair. 

• The advice, information, or recommendation provided by the car dealer was considered unfair due to the influence of the commission or fee the dealer would receive from the finance provider. 

• The car dealer did not offer the customer the best available interest rate.

The FOS encourages businesses to consider if motor finance commission complaints can be handled by the FCA's temporary complaint handling rules and notes the impact of ongoing legal proceedings on its ability to make final decisions in these cases.

The full breakdown of Q3 2024/25 complaints data can be found here and further data and insights can be found here.

HM Treasury policy paper on pilot Digital Gilt Instrument (DIGIT)

On 18 March 2025, HM Treasury and the UK Debt Management Office (DMO) published a policy paper with information and engagement questions on their pilot Digital Gilt Instrument (DIGIT).

DIGIT will be issued within the Digital Securities Sandbox, independent of the government's standard debt issuance process. DIGIT's initial features have already been set out as a short dated, transferable security held on a DLT platform. HM Treasury is seeking information from financial sector firms to understand investor demand and design preferences, and from potential DLT suppliers in relation to technology options that are available. The deadline for responses is 13 April 2025.

Speech by Master of the Rolls on work of UK Jurisdiction Taskforce

On 12 March 2025, the Master of Rolls, Sir Geoffrey Vos, delivered a speech to the LawTech UK Conference 2025 setting out the existing and new workstreams of the UK Jurisdiction Taskforce (UKJT). In relation to digital assets:

• The government has asked the UKJT to establish an expert group to produce non-binding guidance on the legal concept of "control" in relation to digital assets. This reflects a recommendation of the Law Commission in its June 2023 report on digital assets, in which it identified that the concept of "control", as opposed to "possession", was appropriate to digital assets. In the Law Commission's supplemental report of July 2024, following publication of draft legislation, a number of consultees emphasised the importance of ensuring that the courts have the necessary information about digital assets to assist the development of the common law given the compactness of the proposed legislation. The Property (Digital Assets etc) Bill is currently proceeding through the House of Lords.

• The UKJT is forming an International Jurisdiction Taskforce with the objective of bringing together experts to explore possible private law alignment between major jurisdictions in the context of digital assets and digital trading.

MiCA updates: official translations of ESMA guidelines

Suitability requirements and format of periodic statement for portfolio management activities under MiCA

On 26 March 2025, ESMA published the official translations of its guidelines on suitability requirements and format of the periodic statement for portfolio management activities under Article 81(15) of the Regulation on markets in cryptoassets (MiCA).

The guidelines apply from 25 May 2025, by which date national competent authorities must notify ESMA whether they comply, do not comply but intend to comply, or do not intend to comply with the joint guidelines. Financial market participants are not required to report whether they comply with the guidelines.

Conditions for qualification of cryptoassets as financial instruments under MiCA

On 19 March 2025, ESMA published the official translations of its guidelines on the conditions and criteria for the qualification of cryptoassets as financial instruments under Article 2(5) of MiCA. The guidelines aim to clarify the delineation between the respective scopes of MiCA applications and other sectoral regulatory frameworks, particularly under MiFID II.

The guidelines apply from 18 May 2025, by which date national competent authorities must notify ESMA whether they comply, do not comply but intend to comply, or do not intend to comply with the joint guidelines. Financial market participants are not required to report whether they comply with the guidelines.

Explanations, opinions and standardised test for classifying cryptoassets under MiCA

On 10 March 2025, ESMA published the official translations of the ESAs' guidelines on explanations and opinions under Article 97(1) of MiCA. 

Applying from 12 May 2025, the guidelines include a standardised test to promote a common approach to classification and templates that market participants should use when communicating to supervisors the regulatory classification of a cryptoasset. National competent authorities must notify (as appropriate) the EBA, EIOPA or ESMA within two months of the publication of the translations (10 May 2025) whether they comply, do not comply but intend to comply, or do not intend to comply with the joint guidelines. Financial market participants are not required to report whether they comply with the joint guidelines.

MiCA updates: technical standards published in the Official Journal of the European Union

On 31 March 2025, the following Regulations supplementing the MiCA were published in the Official Journal and will enter into force on 20 April 2025:

• Delegated Regulation (EU) 2025/300 regarding regulatory technical standards (RTS) on information to be exchanged between competent authorities, pursuant to Article 95 of MiCA.

• Delegated Regulation (EU) 2025/305 regarding RTS specifying the information to be included in an application for authorisation as a cryptoasset service provider, pursuant to Article 62(5) of MiCA.

• Delegated Regulation (EU) 2025/414 regarding RTS specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in a cryptoasset service provider (CASP), pursuant to Article 83 of MiCA. 

• Delegated Regulation (EU) 2025/413 regarding RTS specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in an issuer of an asset-referenced token, pursuant to Article 41 of MiCA.

• Implementing Regulation (EU) 2025/306 regarding implementing technical standards (ITS) to standard forms, templates and procedures included in a CASP authorisation application, pursuant to Article 62(2) of MiCA. 

• Delegated Regulation (EU) 2025/422 regarding RTS specifying the content, methodologies and presentation of information in respect of the sustainability indicators in relation to adverse impacts on the climate and other environment‐related adverse impacts, pursuant to Articles 66(6) of MiCA, Article 6(12) of the content and form of the cryptoasset white paper (CAWP), Article 19(11) of CAWP for ARTs and Article 51(15) of the CAWP for EMTs.

On 24 March 2025, the following Delegated Regulations supplementing MiCA were published in the Official Journal of the European Union and will enter into force on 13 April 2025:

• Delegated Regulation (EU) 2025/415 regarding regulatory technical standards (RTS) specifying adjustment of own funds requirement and minimum features of stress testing programmes of issuers of asset-referenced tokens (ARTs) or of e-money tokens. The Delegated Regulation reflects a mandate in Article 35(6) of MiCA.

• Delegated Regulation (EU) 2025/418 regarding RTS specifying the minimum content of the governance arrangements on the remuneration policy of issuers of significant ARTs or e-money tokens. The Delegated Regulation reflects a mandate in Article 45(7) of MiCA.

• Delegated Regulation (EU) 2025/419 regarding RTS specifying the procedure and timeframe for an issuer of ARTs or of e-money tokens to adjust the amount of its own funds. The Delegated Regulation reflects a mandate in Article 45(7) of MiCA.

• Delegated Regulation (EU) 2025/421 regarding RTS specifying the data necessary for the classification of cryptoasset white papers and the practical arrangements to ensure that such data is machine-readable. The Delegated Regulation reflects a mandate in Article 109(8) of MiCA.

Parliamentary report on APP fraud

On 2 April 2025, the All-Party Parliamentary Group (APPG) on Fair Banking published a report on authorised push payment (APP) fraud. The report addresses several key issues, including the scale of APP fraud in the UK, the human cost of fraud, the role of social media, mandatory reimbursement requirements (MRR) established by the PSR, and fraud warnings issued by the banking industry.

The report contains a number of recommendations:

• All payment service providers (PSPs) should be required to establish clear pathways for reporting fraud across all platforms. Should banks fail to implement these measures, a centralised fraud reporting system for data collection and performance monitoring may need to be considered.

• More granular APP fraud data is needed, including the average number of payments per case broken down into particular types of fraud, numbers of complaints related to non-payment of compensation that are referred to the Financial Ombudsman Service (FOS) sub-divided by firm, and data regarding compliance with the five-day target for compensation under the MRR scheme.

• Social media companies should be required to contribute towards the MRR and the Economic Crime Levy. Additionally, through existing legislation or new legislation, the government should hold social media companies to account for their effectiveness in combating fraud.

• The PSR should monitor the use of fraud warnings to ensure they effectively deter fraudulent activities rather than serve as grounds for rejecting compensation claims.

As a follow-up to its report, the APPG plans to publish further recommendations later in 2025.

FSB to establish a forum on cross-border payments data

On 27 March 2025, the Financial Stability Board (FSB) announced that it would be establishing a forum on cross-border payments data (Forum). The creation of the Forum was a key conclusion of the FSB's December 2024 report on promoting alignment and interoperability across data frameworks related to cross-border payments.

It will be made up of experts across the following disciplines:

• payments

• anti-money laundering and counter terrorist financing

• sanctions

• data privacy and protection.

The Forum aims to:

• improve collaboration on data-related matters in cross-border payments, focusing on the methodologies for data collection, storage and management across international boundaries

• serve as a hub for dialogue, information sharing, and research, thereby helping to identify and resolve discrepancies within global data frameworks. 

In addition, an advisory committee consisting of private sector representatives will be set up to provide industry insights and expertise to the Forum.

The first meeting of the Forum will take place in May 2025.

Payments aspects of the FCA's 2025-2030 strategy

The FCA's 2025-2030 strategy, published on 25 March 2025 (see above), contains a number of payments-related measures:

• As it integrates the PSR and many of its functions into the FCA, the FCA will deliver the government's National Payments Vision, prioritising the development of seamless account-to-account payments and Variable Recurring Payments.

• It will work with all those involved in Open Banking to put it on a commercially sustainable footing.

• It will lead on Open Finance. Within a year, it will publish a roadmap for the roll out of Open Finance. It expects the regulatory foundations for the first scheme to be in place by the end of 2027. It wants to prioritise small business lending so that they have better access to lending.

• As one of the success metrics for its financial crime priority, the FCA intends to be able to report in 2030 a slower growth in APP fraud cases and losses.

FCA engagement paper on future approaches to contactless payment limits

On 14 March, the FCA published an engagement paper seeking input on approaches to contactless payment limits. Currently, £100 is the maximum payment in any single contactless transaction, £300 is the cumulative limit across several transactions and there can be no more than five consecutive contactless transactions before authentication is required. 

The FCA suggests alternative approaches, aiming to provide more flexibility to PSPs, consumers and businesses while also reducing the risk of fraud:

• new risk-based exemption allowing PSPs more flexibility in setting their own contactless limits for in-person transactions, subject to low rates of fraud

• increasing existing contactless limits or removing them entirely

• relying on FCA Consumer Duty rather than bespoke rules.

Separately, the UK government committed to revoking the payment regulations relating to Strong Customer Authentication (SCA) in its National Payments Vision, which supports the government's growth mission. They will consider any changes to contactless limits in the context of any future changes to the wider SCA framework. 

The FCA seeks feedback from stakeholders. The deadline for responses is 9 May 2025.

PSR policy statement on publication of 2024 APP scams data

On 12 March 2025, the Payment Services Regulator (PSR) published a policy statement on its approach to the publication of authorised push payment (APP) scams data. The PSR will publish the data for 2024 in two separate updates in light of the new APP scam reimbursement rules that came into force in October 2024:

• A pre-reimbursement requirement update, intended to be published in October 2025, covering APP scams that took place over Faster Payments before 7 October 2024 and where the case was closed between 1 January 2024 and 31 December 2025. It will reflect data collected from the 14 largest banking groups in Great Britain and Northern Ireland. 

• A snapshot of industry performance post-reimbursement, intended to be published in spring 2025, covering APP scams across Faster payments on or after 7 October and where the case was closed between 7 October and 31 December 2024. It will reflect data provided by Pay.UK.

The PSR intends to undertake a call for views in spring 2025 on future data reporting, to ensure that this reporting aligns with consumer needs, regulatory requirements and transparency. In particular, the PSR will consider whether it reports at the firm or industry level, the frequency of future reporting and the potential inclusion of additional metrics.

HM Treasury to abolish PSR

On 11 March 2025, HM Treasury published a press release announcing its decision to abolish the Payment Services Regulator (PSR).

This decision follows complaints from businesses that the regulatory environment is too complex and has a disproportionate impact on smaller firms that are trying to grow. HM Treasury, as a part of its Plan for Change, will consolidate the PSR and its functions primarily within the FCA to create a more streamlined regulatory framework. The government will consult on the details of this reform over the course of the summer and will legislate as soon as possible; there are no immediate changes to the PSR's remit or ongoing programme of work for the time being.

On 12 March 2025, the government published letters it had sent to the House of Lords Financial Services Regulation Committee and the House of Commons Treasury Committee updating them on the decision.

On 24 March 2025, the PSR wrote to the Treasury Committee to clarify at what stage the PSR became aware that the government intended to restructure the PSR, following the appearance of the Chair and the Managing Director of the PSR before the Committee on 12 March 2025.

ECB confirms introduction of verification of payee service

On 11 March 2025, the European Central Bank (ECB) published a news release announcing the introduction of a verification of payee (VoP) service for PSPs, helping payment service providers in the Single Euro Payments Area to comply with credit transfer requirements under the Instant Payments Regulation (IPR). The IPR requires a payer to be informed of any discrepancies between the payment account number and the payee's name, before initiating the payment.

The VoP service will be available for instant payments as well as for SEPA credit transfers.

PSR market review into card scheme and processing fees

On 6 March 2025, the PSR issued its final report on the market review of card scheme and processing fees. It concluded that Mastercard and Visa are not subject to effective competitive constraints on the acquiring side and revealed that they have increased their core scheme and processing fees to acquirers by at least 25% since 2017. As a result, businesses have incurred at least £170 milion more annually. The report highlights that lack of clear and detailed fee information has contributed to higher costs for acquirers and merchants, particularly affecting small retailers.

On 2 April 2025, the PSR published its consultation paper (CP25/1) on its proposed approach to remedies to address the issues it identified in its market review.

There are four proposed remedies:

• information transparency and complexity: better information for merchants and acquirers by requiring schemes to provide more information on fees so merchants can better understand the fees they are charged and ultimately reduce costs 

• regulatory financial reporting: this will allow the PSR to effectively monitor and understand the schemes’ financial performance on fees charged in the UK 

• pricing governance: requiring schemes to improve their processes around pricing decisions’ process and record keeping to enable the PSR to better understand the appropriateness of these fees

• publishing scheme information: improve accountability and transparency.

Responses to the CP are required by 28 May 2025.

If, having considered the feedback it receives, the PSR decides to proceed with the remedies, it will consult on a specific proposed remedy package (including a draft cost benefit analysis and draft direction). 

If it decides not to proceed, it will publish its reasons and next steps.

BNPL products removed from ban on advertising unregulated investments in broadcast media

On 26 March 2025, changes took effect to Section 14 of the UK Code of Broadcast Advertising (Financial products, services and investments) to clarify the scope of the ban of advertising unregulated investments in broadcast media. This follows a consultation that was issued in September 2024.

Prior to the amendments, broadcast adverts for investments not regulated or permitted under the Financial Services and Markets Act 2000 could not be broadcast to mainstream, non-specialist audiences on TV and radio and could only appear on specialised financial channels, stations or programme. This had an unintended effect of banning TV advertisements for mass market financial products that would not generally be regarded by the layperson as an investment on mainstream channels. In particular, it disproportionately restricted advertisements for unregulated buy-now pay-later services from appearing in mainstream broadcast media.

The changes introduce wording to ensure that the ban only applies to products that are (or are presented as) conventional investments, in the sense that the consumer may invest money with the expectation of a return. To avoid unintended consequences, the amended rules will be reviewed in 12 months' time.

FCA call for evidence on impact of MCOB interest rate stress test rule

On 18 March 2025, the FCA published a Call for Evidence on the impact of its interest rate stress test rule in Chapter 11 of the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB). The call for evidence is open until 11 April 2025.

This comes after the FCA's reminder to lenders of flexibility when designing their stress test, and the publication on the same date of a letter to the Economic Secretary to the Treasury, Emma Reynolds, mentioning its intention to launch a Call for Evidence on current and alternative approaches to stress testing. The letter also set out details of FCA initiatives intended to improve access to mortgages:

• The holding of an Open Finance Sprint on 27 and 28 March to explore how smart data can enhance mortgage products and services.

• In May 2025, the FCA will consult on proposals intended to make it easier for consumers to remortgage with a new lender, reduce their overall cost of borrowing through term reductions and discuss their options with a firm outside a regulated advice process. The FCA will also consult on retiring regulatory guidance where it considers that the Consumer Duty ensures consumer protection.

• In June 2025, the FCA will launch a public discussion on the future of the mortgage market. This will include consideration of risk appetite and responsible risk-taking, alternative affordability testing and product innovation, lending into later life, and consumer information needs.

Motor finance update

Johnson v FirstRand Bank: FCA's submissions to Supreme Court

On 1 April 2025, the FCA published its written submissions to the Supreme Court in relation to the appeal of the Court of Appeal's decision in Johnson v FirstRand Bank Ltd [2024] (Johnson).

In summary:

• The FCA states its position falls between that of the Appellants and the Respondents.

• The sweeping approach of the Court of Appeal in effect treating motor dealer brokers as owing a fiduciary duty in the generality of cases goes too far. Such an approach would appear to dilute the requirements for the duty and would be at odds with the legislative and regulatory framework. This could have significant, unintended read-across to other regulated intermediaries, which may lead to unanticipated legal consequences.

• There is a place for the "disinterested duty" in relation to prohibiting secret payments in certain contexts (jettisoning this duty risks leaving a gap in the general law and being contrary to established principles). It may need to be clarified to place it on a firmer footing.

• Negating secrecy should be decided on a case-by-case assessment. The FCA suggests that in the ordinary case where terms and conditions disclose the possibility of commission being paid, that ought to be sufficient to negate secrecy. 

• In terms of vulnerability, the need for borrowing, is not sufficient to regard a customer as vulnerable. The FCA is also required to take into account different levels of transactional risk, differing degrees of consumer experience and expertise, and the general principle that consumer should take responsibility for their decisions.

• The existing regulatory framework is well-balanced and principled as it focuses on transparency and fairness in arming the consumer with sufficient information to make an informed decision.

The hearing is due to finish on 3 April 2025. Recordings of the hearing can be accessed here.

FCA statement on next steps in motor finance review

On 11 March 2025, the FCA published a statement on the next steps in its review of motor finance discretionary commission arrangements (DCAs). 

Within six weeks of the Supreme Court's decision in Johnson, the FCA will confirm whether there will be an industry-wide redress scheme for DCAs. The FCA's next steps on non-DCA complaints will also be informed by the outcome of the Supreme Court case.

FCA announces regulatory streamlining plans following Consumer Duty implementation

On 25 March 2025, the FCA published a feedback statement outlining its programme of action to simplify regulatory requirements following the introduction of the Consumer Duty. The FCA plans to:

• make it easier to navigate regulations for consumer finance, investment and mortgages firms by retiring more than 100 pages of outdated guidance

• seek to withdraw all Dear CEO and portfolio letters pre-dating its 2022-2025 strategy

• review current prescriptive disclosure rules to allow firms more flexibility to tailor communications to customers' needs and preferences such as online and digital transactions.

Key dates and commitments in this feedback statement include:

• withdrawing historic supervisory communications by the end of April 2025

• a consultation paper and a discussion paper reviewing the mortgage rule in May and June 2025

• a review of the international application of FCA conduct rules in the insurance sector by summer 2025

• a review of core definitions in the FCA Handbook, including consultation on the definition currently used in the insurance sector to determine which SME customers need protecting under the rules applying to retail customers, expected ‘shortly’

• a review of the financial promotion rules for consumer credit in 2025

• a review of Assessment of Value reporting for asset management in 2025

• a consultation on updating requirements in the FCA’s Client Assets sourcebook (CASS) in 2025

• publication of a smaller firm guide in 2025

• consulting on targeted clarifications of Handbook materials in 2025 including: Principles 6 and 7, along with the Treating Customers Fairly (TCF) initiative and Chapter 5 of the Collective Investment Schemes sourcebook (COLL).

FCA review of firms' approaches to consumer support under Consumer Duty

On 7 March 2025, the FCA published its findings following a multi-firm review into how firms approach providing consumer support under the consumer duty. The FCA carried out an initial quantitative survey of 407 retail firms, in May 2024, across the banking, insurance, payments, consumer finance and investment sectors. Areas for improvement include:

• Aligning support processes to target market. If processes are not aligned, it may prevent firms from meeting the needs of their customers.

• Making post-sale support as accessible and effective as pre-sale support. Long wait times and inaccessible information were examples of poor outcomes the FCA saw when assessing support.

• Embedding a culture within step with the Duty. 

• Monitoring a broader range of outcomes about effective customer support.

The FCA also provides examples of good practice and explains how the firms implement them will depend on their business, size and circumstances.

FCA review of firms' treatment of customers in vulnerable circumstances

On 7 March 2025, the FCA published its findings following its multi firm review into firms' treatment of customers in vulnerable circumstances and its assessment of whether FG21/1 (Guidance for firms on the fair treatment of vulnerable customers) (Guidance) is still appropriate.

The FCA found many examples of positive actions by firms across sectors and evidence that the Consumer Duty had helped firms to deliver good outcomes for consumers in vulnerable circumstances. However, it did identify a number of areas for improvement, including: 

• ineffective outcomes monitoring

• failing to provide appropriate support, particularly in relation to supporting staff in identifying customers in vulnerable circumstances, encourage customer disclosure, or provide support promptly and with an appropriate level of care

• failing to provide clear communications and a lack of testing of consumer understanding

• lack of tailored training and embedding consumers' needs into product and service design.

The FCA has decided not to update the Guidance, as its review has concluded that it remains appropriate and helpful alongside the Consumer Duty. 

The FCA has published examples of good practice and areas for improvement, which it encourages firms to make use of.

Speech by Master of the Rolls on work of UK Jurisdiction Taskforce

On 12 March 2025, the Master of Rolls, Sir Geoffrey Vos, delivered a speech to the LawTech UK Conference 2025 setting out the existing and new workstreams of the UK Jurisdiction Taskforce (UKJT) (see the Digital assets section).

In relation to AI, the UKJT will produce a legal statement discussing whether the law of tort is adequate to provide redress for harms caused by AI, specifically referring to the European Commission's proposed AI Liability Directive and the need for the UK to keep pace with other jurisdictions in this arena. The Master of Rolls emphasised the importance of overcoming market uncertainty surrounding the circumstances in which developers and deployers of AI systems may incur liability for damage caused by the AI system.

FCA and ICO letter on supporting AI, innovation and growth in financial services

On 10 March 2025, the FCA published a letter sent jointly with the Information Commissioner's Office (ICO) to trade association chairs and CEOs of financial services firms on supporting AI, innovation and growth.

The letter noted that respondents to a recent FCA and BoE survey identified data protection and consumer duty to be in the top three regulatory constraints to AI in the financial services sector. The FCA will host a roundtable with industry leaders on 9 May 2025, where attendees will be invited to discuss:

• regulatory uncertainty and challenges of AI adoption for firms

• how the ICO and FCA work together to provide greater regulatory certainty

• areas of data protection and financial regulation which need greater clarity.

The deadline for firms to confirm their attendance was 21 March 2025.

European Commission sends formal notice letters to member states for non-transposition of DORA Directive 

On 27 March 2025, the European Commission announced its decision to commence infringement proceedings against 13 Member States for failing to fully transpose the DORA Directive into national law by 17 January 2025. A letter of formal notice has been sent to: Belgium, Bulgaria, Denmark, Greece, Spain, France, Latvia, Lithuania, Malta, Poland, Portugal, Romania and Slovenia. They will have two months to respond and notify their completion of the transposition of the Directive to the Commission.

Delegated Regulation on composition of joint examination teams under DORA published in the OJ

On 24 March 2025, Commission Delegated Regulation (EU) 2025/420 supplementing the Regulation on digital operational resilience for the financial sector regarding regulatory technical standards (RTS) to specify the criteria for determining the composition of the joint examination team (JET) was published in the Official Journal of the European Union (OJ).

The aim of the RTS is to ensure a balanced participation of staff members from the ESAs and from the relevant competent authorities, their designation, tasks and working arrangements.

The Delegated Regulation will come into force on 13 April 2025, 20 days after publication in the Official Journal.

European Commission adopts RTS on sub-contracting ICT services supporting functions under DORA

On 24 March 2025, the European Commission adopted a Delegated Regulation supplementing the Regulation on digital operational resilience for the financial sector (DORA) regarding regulatory technical standards (RTS) specifying the elements that a financial entity has to determine and assess when sub-contracting ICT services supporting critical or important functions.

This is after the Joint Committee of the European Supervisory Authorities (ESAs) published an opinion on 7 March 2025, responding to the European Commission's rejection of its draft RTS in January 2025. The Commission had considered that the requirements introduced by Article 5 of the draft RTS went beyond the mandate given to the ESAs by Article 30(5) of DORA. The proposed amendments suggested by the Commission were subsequently accepted by the Joint Committee of ESAs.

The RTS:

• establish the rules on proportionality and group application

• set out rules on due diligence and risk assessment regarding the use of sub-contractors supporting critical or important functions

• establish the description and the conditions under which ICT services supporting a critical or important function may be sub-contracted

• contain the rules on material changes to sub-contracting arrangements of ICT service supporting critical or important functions and the provisions on the termination of contractual arrangements.

The Delegated Regulation will enter into force on the 20th day after its publication in the Official Journal of the European Union.

Official translations of ESA guidelines on estimation of aggregated annual costs and losses caused by major ICT-related incidents under DORA

On 18 March 2025, ESMA published the official translations of the European Supervisory Authorities' (ESA) joint guidelines on the estimation of aggregated annual costs and losses caused by major ICT-related incidents under the Regulation on digital operational resilience for the financial sector (DORA). The guidelines are issued under Article 11 of DORA and specify a common template for the submission of the aggregated annual costs and losses.

The guidelines will apply from 19 May 2025 and competent authorities must notify the relevant ESA whether they comply, intend to comply or give reasons for non-compliance.

FCA update on enforcement investigation proposals

On 12 March 2025, the FCA published a letter sent to the House of Commons Treasury Committee regarding its proposals for greater transparency of enforcement investigations. 

Following consultations in February and November 2024, the industry remained largely opposed to certain aspects of the FCA's proposals, particularly publicising an investigation into a regulated firm carrying out authorised activity when a public interest test is met. The FCA has decided not to take forward this element of its proposals and will therefore retain its exceptional circumstances test to determine whether it should publicise investigations into regulated firms. It plans to proceed with the following aspects of its proposals that received less industry concern:

• reactively confirming investigations already in the public domain

• public notifications that focus on the potentially unlawful activities of unregulated firms, and regulated firms operating outside the regulatory perimeter, where doing so protects consumers or furthers the investigation

• publishing greater detail of issues under investigation on an anonymous basis, possible using a regular bulletin such as Enforcement Watch. 

The FCA intends to publish its final policy by the end of June 2025 alongside its updated Enforcement Guide.

A similar letter was sent by the FCA to the House of Lords Financial Services Regulation Committee. 

NCA publishes annual SARs report for 2023-2024 

On 28 March 2025, the UK Financial Intelligence Unit (UKFIU) of the National Crime Agency (NCA) released its yearly report on Suspicious Activity Reports (SARs) along with data annexes for the period from April 2023 to March 2024. 

Key findings include:

• a slight growth in the total number of SARs received from 859,905 in the 2022-23 period to 872,408 during 2023-24. 

• a 23% decrease in the number of Defences Against Money Laundering (DAML) received compared to 2022/3 but a 61% rise in refused Defences Against Money Laundering (DAML) compared to 2022/3.

• a 12% decrease in the funds denied from DAML requests compared to the previous year. 

• an increase in Account Freezing Orders related to DAMLs.

• the banking and financial services sector was the largest contributor of SARs, making up 78.55% of all submissions under the new digital platform that was introduced through the course of the 2023-2024 reporting period.

HM Treasury annual report on AML/CFT supervision for 2023 to 2024

On 13 March 2025, HM Treasury published a policy paper detailing its annual report for 2023 to 2024 on AML and CTF supervision. The report includes data on supervisory and enforcement actions by both public sector and professional body supervisors, highlighting key areas such as gatekeeping and risk assessment, monitoring supervised businesses, ensuring compliance and co-operation and information sharing.

The report discusses efforts to improve the effectiveness of the MLRs, prepare for the Financial Action Task Force’s (FATF) next assessment, and update the UK's national risk assessments. It includes new metrics on guidance and training provided by supervisors, data on supervisory interventions and enforcement actions taken against non-compliant businesses.

EBA consults on RTS under AMLA Regulation, AML Regulation and MLD6

On 6 March 2025, following the European Commission's call for evidence, the EBA published a consultation paper on proposed regulatory technical standards (RTS) relating to the new anti-money laundering (AML) and counter-terrorist financing (CTF) framework.

The EBA sets out for comment proposed drafts of the following RTS:

• RTS on the risk assessment for the purpose of selection for direct supervision (under Article 12(7) of the Regulation establishing AMLA

• RTS on customer due diligence (CDD) of the AML Regulation

• RTS on the assessment and classification of the inherent and residual risk profile of obliged entities and the frequency at which such profile must be reviewed of the Sixth Money Laundering Directive

• RTS on pecuniary sanctions, administrative measures and periodic penalty payments of the Sixth Money Laundering Directive. 

The deadline for responses is 6 June 2025. The EBA will submit its response to the European Commission on 31 October 2025.

The answer to last month's question: According the FCA's financial promotions data for Q4 2024, 3,697 promotions were amended or withdrawn following its intervention.

This month's question: The FCA is undertaking a review of the contactless payment limits.  In which provision of the FCA's Strong Customer Authentication Regulatory Technical Standards, are the current limits on contactless payments found?

• Article 16

• Article 12

• Article 18

• Article 11.