7 August 2025
In this month's edition:
July 2025 saw the publication of the Financial Services Growth and Competitiveness Strategy and Leeds Reforms, described by the Chancellor of the Exchequer in her Mansion House speech delivered on the same day, as "the most wide-ranging package of reforms to financial services regulation in more than a decade."
In this special UK Finance blog, we take a look at the reforms.
On 23 July 2025, the FCA published a new webpage on the Berne Financial Services Agreement (BFSA), setting out details of BFSA market access arrangements and how UK and Swiss firms can express interest in providing cross-border services.
The FCA considers the framework that will apply to the market access arrangements for:
The FCA expects the UK regulators to sign a memorandum of understanding with the Swiss Financial Market Supervisory Authority (FINMA) in September 2025. The FCA will also consult on changes to its Handbook to implement the BFSA. In November 2025, the regulators will publish detailed operational guidance.
On 21 July 2025, the government laid two statutory instruments to implement the UK’s commitments under the BFSA. The BFSA is expected to enter into force in early 2026, following ratification by the UK and Switzerland, and firms may make notifications from that date onwards.
On 18 July 2025, the Bank of England (BoE) published a document setting out its supervisory approach to onboarding new financial market infrastructures (FMIs) that fall within its regulatory remit.
It covers the process for becoming a BoE-regulated FMI and explains two discretionary stages available to FMIs which could support new firms completing aspects of their operational set-up. The document also covers the regulatory framework for the different types of FMIs, the four stages of the BoE's supervisory approach to onboarding before firms reach baseline supervision (risk assessment, authorisation or recognition, mobilisation and scaling) and the BoE's specific approach for payment systems and central counterparties.
The BoE may revise and reissue the document in response to significant legislative or other developments that result in changes to its approach.
On 18 July 2025, the BoE published its response (dated 15 July 2025) to a letter from HM Treasury setting out the government's remit, recommendations and priorities for the Financial Market Infrastructure (FMI) Committee.
The response explains how the BoE, as regulator of FMIs, is facilitating innovation to support sustainable economic growth. The annex sets out how the BoE's actions support the recommendations in HM Treasury's letter, including:
On 17 July 2025, the Digital Regulation Cooperation Forum (DRCF) published an article setting out joint insights of the FCA and the Information Commissioner's Office (ICO) on technologies shaping the future of open finance. In March 2025, the FCA hosted an Open Finance Sprint. The ICO participated, utilising the Sprint as an opportunity to build on findings from this research.
To support innovation and competition in financial services, the FCA and ICO are collaborating through the DRFC's Horizon Scanning and Emerging Technology project, allowing people to benefit from their personal data. The article identifies regulatory considerations that the FCA and ICO will need to consider in relation to open finance and smart data:
The recently enacted Data (Use and Access) Act 2025 sets out a framework for access, sharing and use of customer data. The article explains that statutory instruments will be needed to introduce specific sectoral smart data schemes, including open finance.
On 14 July 2025, the Financial Stability Board (FSB) published a letter sent to G20 finance leaders and central bank governors ahead of their July 2025 summit.
The letter sets out the FSB's work priorities, relating to:
The letter also covers three reports that the FSB has recently delivered to the G20 relating to NBFI, non-bank data and an update on its climate roadmap.
On 11 July 2025, the FCA published an outcomes report following the two-day open finance sprint it held in March 2025.
The sprint involved 110 stakeholders, including organisations from the financial services industry, regulators and technology experts, and focused on developing practical data and sharing use-case ideas to support the following areas:
The FCA is launching the Smart Data Accelerator, which it will use to test high impact use cases and accelerate the development and implementation of open finance and smart data in the UK. The FCA will shortly open registrations for two TechSprints in the autumn, which will focus on SME finance and mortgages. The FCA will also produce a roadmap for open finance by March 2026, supported by a research note that it will share later in 2025.
The regulators have published the following annual reports and accounts:
On 10 July 2025, the FCA published a press release, declaring its intention to review its client categorisation rules to unlock more opportunities for wealthy investors and support capital markets, to drive economic growth.
The FCA’s completed growth initiatives include:
As part of this review, the FCA will consult on the elective professional client categorisation later in 2025.
The FCA said that the review will build on 10 initiatives already delivered since January 2025, with around 50 more to be completed before the end of the year.
On 10 July 2025, the FCA published several documents that indicate how it plans to deliver on its secondary international competitiveness and growth objective (SICGO) during the second half of 2025.
The FCA published its SICGO report 2024/25 containing the following annexes:
The FCA also published its response to HM Treasury's recommendations in the November 2024 remit letter, setting out how it is supporting the government's growth mission.
On 1 August, the FCA confirmed that from 8 October 2025 crypto exchange traded notes may be sold to retail clients (cETNs), provided the cETNs are admitted to trading on a UK Recognised Investment Exchange (RIE).
UK RIE cETNs will be categorised as restricted mass market investments (RMMIs) and be subject to marketing restrictions including risk warnings and appropriateness testing. While the Consumer Duty will apply to firms that offer these products to retail clients, the Financial Services Compensation Scheme will not provide coverage.
The FCA consulted on removing the ban on retail access to cETNs in June 2025 – see our July 2025 update.
On 17 July 2025, HM Treasury published a response to its consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). The consultation was launched in March 2024 – see our April 2024 update.
Among the policy changes announced, HM Treasury has confirmed that it will bring the registration and change in control thresholds for crypto businesses that are within the scope of the MLRs in line with FSMA thresholds. It intends to publish the draft statutory instrument in the coming months for technical feedback, before laying it in Parliament later in 2025, if parliamentary time allows.
On 16 July 2025, the Property (Digital Assets etc) Bill passed its second reading in the House of Commons with no amendments.
The Bill had its first reading in the House of Commons on 12 May 2025, having completed its passage through the House of Lords on 8 May 2025. The Bill takes forward a recommendation of the Law Commission in its June 2023 report on digital assets and will establish in statute the common law position that certain digital assets can constitute property.
The next stage is for it to be considered by a Committee of the whole House on a date to be confirmed.
On 15 July 2025, HM Treasury published a policy paper setting out the government's digital strategy for the UK's wholesale financial markets, one of the package of reforms that the government announced in its new Financial Services Growth and Competitiveness Strategy (see above).
Under the digital strategy, the government plans to drive forward the digitalisation of the UK's wholesale financial markets across three broad areas:
On 11 July 2025, ESMA published a final report containing the guidelines for the criteria to assess knowledge and competence of the staff at cryptoasset service providers (CASPs) under the Regulation on markets in cryptoassets (MiCA). ESMA have developed the guidelines under a mandate in Article 81(15) of MiCA.
The guidelines help both CASPs meet their obligations to act in the best interest of their clients and support competent authorities in assessing how CASPs meet those obligations by:
An Annex to the guidelines provides illustrative examples of the application of certain aspects of the guidelines, including their scope. A feedback statement summarising the comments received and ESMA's response is set out in section 3 of the final report.
The guidelines, set out in Annex III of the final report, will now be translated into the official EU languages and published on the ESMA website. They will apply 6 months after their publication.
On 10 July 2025, ESMA published the executive summary of a peer review report on the authorisation and supervision of a cryptoasset service provider (CASP) in Malta under the Regulation on markets in cryptoassets (MiCA).
The peer review targeted one national competent authority (NCA) (the Malta Financial Services Authority), and directly addressed some recommendations to it. The peer review committee (PRC) also makes recommendations that are relevant to all NCAs in their ongoing and upcoming CASP authorisations, advising NCAs in the authorisation process to pay particular attention to:
On 9 July 2025, ESMA published a webpage with the official translations of its guidelines on supervisory practices for national competent authorities (NCAs) to prevent and detect market abuse under Article 92(3) of the Regulation on markets in cryptoassets (MiCA).
The guidelines set out general principles to ensure effective risk-based and proportionate supervision on market abuse in cryptoassets, as well as more specific practices for NCAs regarding detection and prevention.
The guidelines will apply from 9 October 2025, 3 months after the date of their publication on ESMA's website.
On 29 July 2025, the Bank of England (BoE) published a consultation paper on extending Real-Time Gross Settlement (RTGS) and CHAPS operating hours.
The BoE sets out a proposal for consultation and two discussion topics:
The BoE will publish a phase two consultation paper on the two discussion topics in early 2026, followed by a policy statement on the proposals later in 2026.
The deadline to submit comments on the consultation paper is 21 October 2025.
On 18 July 2025, the Payment Systems Regulator (PSR) published a document setting out the figures it uses to calculate the regulatory fees for each PSR fee payer in 2025/26.
Each year, the PSR receives regulatory fees from PSR fee payers to fund its functions under relevant legislation, including the functions under and as a result of:
There are no current plans to increase fees, and the FCA and PSR expect ongoing costs will continue to be funded through fees from regulated firms, in line with the current model. The PSR notes that the funding requirements in terms of actual budgeting decisions post-consolidation of the PSR into the FCA will be informed by organisational priorities and work expectations.
On 15 July 2025, HM Treasury published an update on the work of the Payments Vision Delivery Committee (PVDC), which has agreed a new model to deliver the next generation of UK retail payments infrastructure. The update includes the following points of interest:
HM Treasury has published an updated terms of reference for the PVDC.
Andrew Bailey, the Governor of the Bank of England (BoE), used part of his Mansion House speech on 15 July 2025 to set out opportunities for innovation in the UK’s payments infrastructure.
He spoke about the benefits that digital technologies can bring to both domestic and cross-border retail payments and the new Real Time Gross Settlement platform.
Bailey referred to the current debate on the future of payments. He said that while there may be a role for stablecoins, they were not a substitute for commercial bank money. The BoE's role was to ensure that stablecoins purporting to be money are safe. On the possibility of a central bank digital currency, he said he "remain[s] to be convinced why the natural next step is to create a new form of money rather than put technology into retail payments and bank accounts."
Bailey's observations follow comments he made in an interview with The Times reported on 13 July 2025, where he placed more emphasis on the role of tokenised deposits than stablecoins.
On 26 June 2025, the FCA published a new webpage containing the findings of its multi-firm review of risk management and wind-down planning at e-money and payments firms.
During 2024/25, the FCA reviewed a sample of 14 firms with e-money and payments permissions and aggregated its findings to identify themes, good practices and areas for improvement with the aim of helping these firms understand existing regulatory expectations.
In particular, the FCA found that the firms were not following the guidance on assessing adequate financial resources in FG20/1, and identified 3 main areas where firms need to improve their frameworks:
Almost all the wind-down plans (WDPs) reviewed were disconnected from the firm's risk management framework. The WDPs reviewed also lacked sufficient detail, testing and validation. The FCA will continue to engage with the sector to ensure effective risk management and WDPs are in place.
On 1 August 2025, the Supreme Court handed down a unanimous judgment in three motor finance appeals: Hopcraft v Close Brothers Limited, Johnson v FirstRand Bank Limited (t/a MotoNovo Finance) and Wrench v FirstRand Bank Limited (t/a MotoNovo Finance). It allowed the appeals brought by lenders but upheld the unfair relationship claim brought by Mr Johnson.
On 3 August 2025, the FCA published a statement announcing its intention to consult on an industry-wide motor finance consumer redress scheme, along with a related press release and transcript of a conference call it held with market analysts. It notes that the judgment provides helpful clarity on the factors that suggest an unfair relationship under the Consumer Credit Act 1974 (CCA), which had previously been interpreted differently by the courts.
The FCA intends to launch the six-week consultation by early October 2025. If the redress scheme goes ahead, the FCA aims to launch it and start paying compensation to consumers in 2026. The FCA will propose that the scheme covers arrangements from 2007 onwards.
Look out for our forthcoming article that will take an in depth look at the Supreme Court judgment and the potential motor finance consumer redress scheme.
On 31 July 2025, the Solicitors Regulation Authority (SRA) and FCA published a press release warning law firms and claims management companies (CMCs) over poor practices in motor finance claims.
The FCA expects CMCs to inform clients of the existence of a redress scheme or where there is a realistic prospect of one being introduced. This would allow them to pursue a claim for themselves free of charge, even if the redress scheme has not yet been confirmed, provided this is done before a client signs any agreement with them. Under FCA rules, CMCs must inform customers of their right to exit the agreement at any time and any fee that may be payable by them.
The regulators concerns include:
On 4 August 2025, the FCA published a letter (dated 31 July 2025) it has sent to CMCs, asking them to review their financial promotions relating to motor finance claims, to ensure they comply with relevant rules in the FCA Handbook (as set out in Annex 1 of the letter), including the Consumer Duty.
The letter sets out the FCA's concerns regarding financial promotions across a range of media platforms, including social media, banner advertisements and paid ads, that may breach the requirements set out in the Claims Management: Conduct of Business sourcebook (CMCOB) and the Consumer Duty. It includes concerns on financial promotions that exaggerate potential claims or falsely imply refunds have been secured or are guaranteed, and on promotions where CMCs sign-up consumers without their consent. To prevent customers from being misled, the FCA asks CMCs to:
The FCA says that it will be proactively monitoring the market to check compliance. It will take appropriate supervisory action where it finds financial promotions that break the rules or sees that a CMC is not taking adequate mitigating actions.
On 18 July 2025, the FCA published a consultation paper (CP25/23) on its proposed approach to regulating deferred payment credit (DPC), commonly referred to as Buy Now Pay Later products. We will be publishing an article shortly, which will look at the proposals in detail.
On 31 July 2025, the FCA published its findings on digital acquisition journeys and customer outcomes for consumer credit providers, as part of its ongoing work on the Consumer Duty. The review assessed how digital platforms and apps influence customer engagement, product applications and borrowing.
Key good practices include:
Key areas identified for improvement include:
The FCA expects firms to use analytics and customer feedback to monitor and improve digital journeys, test communications for clarity and avoid over-reliance on positive online reviews as indicators of good outcomes. Firms should regularly review customer outcomes and ensure digital design supports the Consumer Duty requirements.
On 9 July 2025, the FCA published the terms of reference for its AI Live Testing initiative and opened the application window.
The terms of reference explain that:
On 16 July 2025, the European Central Bank (ECB) published the final version of its guide for banks on outsourcing cloud services to cloud service providers. One of the guide's aims is to provide clarity on the ECB's expectations on the related requirements set out in the Regulation on digital operational resilience for the financial sector (DORA).
The final version more clearly differentiates the requirements set out in DORA from the good practices recommended by the ECB. It also:
The final version emphasises the importance of maintaining a risk-based approach and applying proportionality to outsourcing cloud services, while accounting for the various organisational set-ups, areas of activity and risk profiles of the banks that the ECB supervises.
The ECB also published a speech by Anneli Tuominen, Member of the ECB Supervisory Board, relating to the new guide.
On 15 July 2025, the European Supervisory Authorities (ESAs) published a guide on the oversight of critical ICT third-party service providers (CTPPs) under the Regulation on digital operational resilience for the financial sector (DORA). It also describes the:
The guide is mainly addressed to CTPPs, financial entities and national competent authorities (NCAs), and other external stakeholders. It provides an overview of the DORA oversight framework, including its scope, objectives, underlying principles and the role of NCAs. The guide may be revised as oversight experience continues to develop.
On 25 July 2025, the FCA announced that it had revoked Carlo Palombo's ban from the financial services industry and is ending its action against Tom Hayes following the recent Supreme Court judgment quashing their criminal convictions for LIBOR manipulation.
The FCA will take no further action against either individual.
On 25 July 2025, the FCA published the final notice (dated 22 July 2025) it issued to Jean-Noël Yves Alba, former deputy CEO of H2O AM LLP (an asset manager), fining him £1,049,500 and prohibiting him from working in the financial services industry for deliberately misleading the FCA. That figure is after a 30% (Stage 1) discount was applied, following Mr Alba's agreement to resolve the matter.
It found that, between August 2019 and July 2021 (the relevant period), Mr Alba failed to:
Between 2015 and 2019, H2O made a series of high-risk investments through the funds it managed into other entities. Following significant investor redemption, the FCA opened an investigation and censured H2O in August 2024, which we covered in our September 2024 update. Please also see our briefing, which discusses the governance and compliance lessons learned from the FCA's investigation.
Mr Alba (referred to as "Senior Manager A" in the final notice) was the principal point of contact with the FCA during its investigation. The FCA considers that Mr Alba acted intentionally, or in the alternative, recklessly to mislead the FCA. The FCA also considers that Mr Alba's objective in the continued provision of misleading information to it was, in part, to hide the fact that he had knowingly made earlier inaccurate and misleading statements to the FCA. It therefore views Mr Alba's misconduct as serious and considers that he is not a fit and proper person.
On 16 July 2025, the FCA published the final notices (both dated 14 July 2025) that it issued to Barclays Bank UK plc (Barclays UK) and Barclays Bank plc (Barclays plc), fining them a total of £42,408,300 for separate instances of failings in financial crime risk management.
The FCA has fined Barclays UK £3,093,600 for failing, between January 2021 and April 2023, to ensure that it gathered sufficient information to understand and manage the money laundering risk before opening a client money account for WealthTek LLP. That figure is after a 30% (Stage 1) discount was applied, following Barclays UK's agreement to resolve the matter. The FCA found that:
In addition to the fine, Barclays UK has agreed to make a voluntary payment of £6,281,757 to WealthTek's clients.
The FCA fined Barclays plc £39,314,700 for failing to adequately identify, assess, monitor and manage the money laundering risks associated with providing banking services to Stunt & Co Ltd between January 2015 and April 2021. That figure is after a 30% (Stage 1) discount was applied, following Barclays plc's agreement to resolve the matter. The FCA found that Barclays plc:
On 10 July 2025, the FCA published its 2024/25 enforcement data, which forms part of its Annual Report, showing the enforcement action it took in 2024/25.
From 31 March 2024 to 31 March 2025, the number of open enforcement operations fell from 188 to 130. During the same period, the FCA:
On 9 July 2025, the Bank of England (BoE) published its final notice issued to Vocalink Ltd, finding the company £11.9 million for a compliance failure under section 196 of the Banking Act 2009.
Vocalink was brought under the BoE's regulatory remit in April 2018 having been specified as a service provider to certain recognised payment systems. A review in 2020 into the performance of Vocalink's systems and control identified a number of weaknesses. Vocalink implemented a remediation programme, issued by the BoE via a direction under section 191 of the Banking Act 2009. A related press release explains that an ineffective risk management framework, combined with weaknesses in its controls, governance arrangements and escalation processes, meant that it failed to comply in full with the direction's requirements by the 28 February 2022 deadline.
This is the first time the BoE has fined a financial market infrastructure (FMI) firm. The BoE and Vocalink reached an agreement to settle during the discount stage of the BoE's penalty policy, and a 30% discount was applied to the Step 4 figure.
On 28 July 2025, the European Banking Authority (EBA) published its fifth opinion on the risks of money laundering (ML) and terrorist financing (TF) that are affecting the EU's financial sector, as required every two years under Article 6(5) of the Fourth Money Laundering Directive (MLD4) and Articles 16a(1) and 29(1)(a) of the EBA Regulation.
Key points include the following:
On 17 July 2025, HM Treasury published the National Risk Assessment of Money Laundering and Terrorist Financing 2025 (NRA).
The NRA identifies the key money laundering and terrorist financing risks for the UK. It identifies how the risks, and actions taken against them, have changed since the previous risk assessment was published in 2020. The key changes identified include:
The money laundering risk in the regulated EMI and PSP sector has increased from medium to high, largely as a consequence of the rapid scaling of the sector since 2020 and increased complexity and diversification of services, making it more attractive to criminals. Similarly, the risk of money laundering through cryptoassets has increased since 2020 and is now assessed to be high, driven by the increase in use by the general public, alongside the speed with which money can be moved.
The NRA also addresses terrorist financing and sector specific risks, and highlights three emerging "cross cutting risks" in AI, schools and universities and football clubs and agents.
On 21 July 2025, the Office of Financial Sanctions Implementation (OFSI) published a threat assessment report relating to cryptoassets.
The report outlines OFSI's assessment of threats to sanctions compliance involving UK cryptoasset firms between January 2022 and May 2025. Its aim is to provide information on suspected sanctions breaches and assist stakeholders to prioritise as part of a risk-based approach to compliance.
Key findings in the report include the following:
Russia accounts for over 90% of cryptoasset-related suspected breach reports made to OFSI since January 2022, with Iran making up the remaining 10%.
On 16 July 2025, the Proceeds of Crime (Money Laundering) (Threshold Amount) (Amendment) Order 2025 was made and comes into force on 31 July 2025.
The order increases the threshold amount specified in section 339A(2) and (6A) of the Proceeds of Crime Act 2002 (POCA), from £1,000 to £3,000. The threshold amount refers to the value of criminal property below which a regulated firm can carry out a transaction in operating an account for a customer without committing an offence under sections 327 to 329 of POCA.
On 15 July 2025, the FCA published an amended version of its guidance on the treatment of politically exposed persons (PEPs) for anti-money laundering (AML) purposes (FG25/3).
The FCA published the final version of its guidance on 7 July 2025, which we covered in last month's edition. The new guidance is in the last bullet on page 12 in the "Who should be treated as a PEP" section. It clarifies that firms should not treat non-executive board members of civil service departments in the UK as PEPs, unless they already meet the PEP definition in another capacity (e.g. a Member of the House of Lords).
On 3 July 2025, the European Banking Authority (EBA) published a memorandum of understanding (MoU) (dated 27 June 2025) entered into between the European Supervisory Authorities (ESAs) (that is, the EBA, ESMA and EIOPA) and the EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA).
The MoU aims to promote supervisory convergence throughout the EU financial services sector, and provides a framework that will enable the ESAs and the AMLA to exchange information and co-operate to perform their respective tasks.
The answer to last month's question: 9 regulators were involved in the "global week of action against unlawful influencers", which began on 2 June 2025.
This month's question: According to the UK's latest National Risk Assessment of Money Laundering and Terrorist Financing, what was the total payments value reported for electronic money institutions and payments firms for the 2023 calendar year?
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