UK Regulatory Radar

Simplifying the UK Listing Regime: The FCA has published major changes to the listing rules after extensive consultation over the last few years. With the aim of boosting growth and innovation on UK stock markets, the simplified regime compresses the 'premium' and 'standard' listing segment into on single category, removes move the need for votes on significant or related party transactions and offers flexibility around enhanced voting rights. Shareholder approval for key events, like reverse takeovers and decisions to take the company's shares off an exchange, is still required. The FCA is clear that the new rules involve allowing greater risk but believes the changes will better reflect the risk appetite the economy needs to achieve growth. The rules will go live on 29 July 2024.

Updates to the Sponsor Regime: Alongside the updates to the Listing Regime above, in Primary Market Bulletin 50, the FCA provides an update on the work it has been doing in relation to the sponsor regime, consults on the introduction of new technical notes relating to supervisory reviews of sponsor firms and the FCA's expectations of a sponsor in relation to specialist due diligence and consults on an update to its existing technical note on sponsor record keeping.

UK EMIR: The FCA has published final Q&A to support the implementation of the updated UK EMIR reporting requirements that go live on 30 September 2024. However, in response to a query received in the second consultation, it is consulting on one further draft Q&A under topic 10 — position level reporting.

Updates to the UK Stewardship Code: The Financial Reporting Council (FRC) provided an update on its review of the UK Stewardship Code. It has identified five key areas it will focus on as it considers changes to better support UK capital markets, reduce reporting burdens and drive better stewardship outcomes. These include reviewing the purpose of stewardship, its reporting principles, greater transparency around proxy advisers, more efficient reporting processes and improving the understanding of the Code. A formal consultation will be published later in 2024. In addition, the FRC announced it would be making five immediate changes to significantly reduce the reporting burden on existing signatories to the Code – these take effect for the next application window from 31 October 2024.

Overseas Funds Regime (OFR): The FCA has finalised the rules needed to operationalise the OFR. Compared with its proposals in CP23/26 (PDF 1.2MB), it has made only minor changes. These include removing a requirement to notify the FCA 30 days before certain changes take effect, clarifications on the wider notifications that OFR fund managers will need to make, and additional guidance on disclosures. The FCA’s rules and guidance take effect from 31 July 2024, ahead of landing slots for funds in the Temporary Marketing Permissions Regime from 1 October 2024. More information on the application process and timeline is available on the FCA’s webpage.

Insurance outcomes monitoring: The FCA has published the findings of its insurance multi-firm review of outcomes monitoring. Overall, the FCA found that monitoring MI should be strengthened to ensure an outcomes-based, rather than process-driven approach, and that data is comprehensive enough to ensure effective governance. The review found a wide variation in quality with examples of insurers delivering good outcomes for customers, but also areas for improvement. These included failures to demonstrate actions to address poor outcomes, and failures to monitor outcomes for distinct groups. Although the review was limited to insurers, all firms will be expected to act immediately to assess and address any shortcomings in their outcomes monitoring practices to ensure they are meeting the requirements of the Duty.

Trading apps: The FCA has published findings from a study which indicates the use of digital engagement practices (DEPs) by trading apps can influence user behaviour, increasing trading frequency and risk-taking among consumers. Using a mock trading app platform, the study tested the effect of different DEPs on trading behaviour such as push notifications and prize draws, which are used by trading apps. The study found that DEPs can increase trading frequency and risk taking, and evidence that DEP have a greater effect on those with lower financial literacy. The FCA intends to keep trading apps under review.

Faster payments: APP scams reimbursement requirement: compliance & monitoring: The PSR has confirmed requirements that must be in place for the FSP APP scams reimbursement policy start date of 7 October 2024. Through a policy statement (PDF 470KB) and legal instruments Specific Direction 19 (SD19), Specific Direction 20 (SD20) and Specific Requirement 1 (SR1), the PSR has confirmed the data and information that PSPs be required to provide to Pay.UK to enable it to fulfil its compliance monitoring role, and for the PSR to monitor compliance with its directions.

FCA quarterly consultation paper 24/11: The FCA has published its latest quarterly consultation paper (2.2MB), proposing wide-ranging changes. Asset managers are invited to share views on the FCA's proposals to amend the concentration rules for UK UCITS and to remove references to the UK Long-Term Investment Fund (LTIF) regulation. Wider firms are invited to input on changes relating to the handbook to align it with HMT's revisions to the UK MiFID Org Regulation, the MiFIR transparency regime, and to the Credit Rating Agencies Regulation. There are also proposals that will impact additional regulated firms. These include introducing criminal background checks on owners and controllers at the authorisations gateway, amendments to the supervision manual to reference updated prudential guidelines, and to remove certain Brexit-related provisions. Firms should review relevant aspects of the FCA's proposals in the consultation paper.

FCA fees and levies: The FCA has confirmed (PDF 832KB) its final regulatory fee and levy rates for 2024/25, finalising the rules broadly as they were consulted on, with some amendments. Key amendments include the removal of general insurance firms from the scope of the cost recovery for the Advice Guidance Boundary Review, and confirmation that the final rates for the Access to Cash fee block (A.24) will be made at a later date via a separate instrument. The FCA has also adjusted rates in some areas due to fee data changes used to calculate the rates.