The FCA has proposed “reforms to its regime for alternative asset managers, to make it easier for firms to enter the market, grow, compete and innovate.”
The regulator has said in a press release “the more streamlined and proportionate regime will make it easier for firms to operate globally, while encouraging effective risk management. It will uphold market integrity and market confidence by making sure consumers are appropriately protected.”
The announcement came on the same day the UK government said in a press release that a number of opportunities have been identified to make rules easier and simpler for firms to do business in the UK.
We covered the story in more detail.
And in another step to support growth, the FCA has announced steps to “make it easier for firms to test innovative products and support new firms applying for regulatory approval.”
In a press release, the regulator has said the new steps are part of its work programme for 2025-2026.
According to the FCA: “Every firm that uses the FCA’s Regulatory Sandbox to safely test innovative products will be provided with an authorisation case officer from the start. This will help the right firms get authorised and bring innovative products and services to market faster.”
We took a look at the detail.
In another significant development last week, the Treasury announced the reappointment of Nikhil Rathi as chief executive of the FCA for a second term.
The regulator said in a press release that, since Nikhil’s joining in September 2020, “the FCA has undertaken reforms to strengthen the UK’s position in wholesale markets, including the biggest changes to the listing regime in over three decades.”
Ashley Alder, the FCA’s Chair has said: “I am delighted Nikhil has been reappointed. He’s the right leader in testing times. His exemplary first term as chief executive has ensured the FCA is an organisation transformed.”
Also last week, the FCA provided an early update “on the potential impact of the feedback on our final rules to support firms who intend to operate a PISCES.”
The regulator said in a press release the aim of the update was “to give firms sight of our thinking as they are working up their plans. However, final rules for PISCES remain subject to the FCA Board’s agreement.”
The FCA clarified that positions outlined in the update are “subject to further development and may be adjusted as we develop our rules instrument for PISCES.”
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The FCA said it is “refreshing the membership of our Sustainable Finance Advisory Committee and seeking expressions of interest to join.”
A press release stated: “In line with our priorities and emerging trends in sustainable finance, we are particularly interested in candidates with expertise in:
- insurance;
- wholesale banking; and
- consumer advocacy.”
The Committee advises the FCA board on emerging sustainability issues. This includes meeting the Government’s expectation that we ‘have regard’ to the UK’s commitment to achieving a net zero economy by 2050, according to the press release.
Also last week, the FCA announced the publication of “a Multi-firm Review, ‘Trading apps: high-level observations.”
According to the regulator: “The publication aims to support new firms and traditional investment brokers seeking to offer these services, to help them understand their existing obligations.”
Key findings included:
- “Business models: Some firms act as introducers, directing customers to other platforms or an affiliated firm. Firms are encouraged to fully understand their obligations as both manufacturers and distributors, as set out in our rules.
- “Revenue drivers: Firms generate income in a range of ways, including transaction fees on trades, subscription fees and interest earned from cash balances. Some firms may need to reassess whether their current pricing structures provide good value for consumers.
- “Digital engagement practices: All firms demonstrated awareness of the need to use digital features, such as notifications, responsibly.
- “Appropriateness testing: While some firms had strong processes for assessing customer understanding of high-risk investments, others lacked adequate checks, potentially exposing consumers to unnecessary risks.”
Consultation
The FCA announced last week it had concluded its “six-week policy sprint, supporting new ways to help consumers make important investment decisions.”
The regulator has said at the end of the process a number of “FCA-authorised firms, including retail banks, platform providers and wealth managers, presented customer journeys they have developed to help and support people to consider cash to investment decisions.”
“The aim of the sprint is to help accelerate the final policy proposals which will be put out for consultation by the end of June 2025,” the FCA has said.
