In 2024, the UK's Financial Conduct Authority (FCA) consulted on amendments to its guidance for IPs on how to approach regulated firms (the Guidance) (see our Alert). The updated Guidance has now been published with effect from 28 April 2025.
Key changes
- Consumer Duty: the Guidance sets out the FCA’s expectation that IPs conduct the affairs of the firm in a way that is compatible with the 'Consumer Duty'. However, it is unclear how IPs manage any conflict regarding this duty to act in accordance with the Consumer Duty and the IP's well-established duty to act in the interests of all creditors.
- Financial Services Compensation Scheme (FSCS) protection: customers of an electronic money institution (EMI) or payments institution (PI) may receive FSCS protection in certain circumstances where the credit institution that holds their safeguarded funds fails. This seems to only be relevant where the EMI or PI is regulated by the Prudential Regulation Authority, not the FCA. Advice is given around the communication of this protection and when liaison with the FSCS is required. However, in practice it is likely that FSCS protection will be relied upon in exceptional circumstances only.
- E-money special administration: the Guidance has clarified that if an EMI or PI is eligible to enter into a special administration, but is instead considering a different insolvency procedure, an IP may not be appointed over the firm unless the FCA is notified of initial steps taken and the FCA has either consented, or a two-week period has expired without objection.
Next steps
IPs appointed over regulated firms should follow the Guidance (as updated) to help them ensure firms meet their ongoing regulatory obligations following appointment.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.
