Our new issue of UK Regulatory Radar brings you the latest industry and regulatory updates impacting financial service providers in the UK.
Click on the images below for our latest insights and see the ‘Further updates’ section for other sector-specific developments.
BoE Bank Capital Stress Test: The BoE has launchedopens in a new tab the 2025 iteration of its new Bank Capital Stress Test for the seven largest and most systemic UK banking groups. This will replace the previous (and more frequent) annual cyclical scenario (ACS) test and seeks to assess the resilience of the banking system to deep simultaneous recessions in the UK and global economies, large falls in asset prices, higher global interest rates, and a stressed level of misconduct costs. The results – which will be published in Q4 – will inform the setting of overall and bank-specific capital buffers.
Leverage ratio changes: The PRA is consultingopens in a new tab (CP2/25) on changes to the retail deposits threshold for application of the leverage ratio. The PRA's current rules require lenders with more than £50 billion in retail deposits, or £10 billion of non-UK assets, to meet a minimum leverage ratio of 3.25%. The PRA proposes to increase the threshold to £70 billion, to give smaller banks "more room to grow" before being caught by the measure and to fix any “inadvertent regulatory tightening". The PRA does not intend to change the £10 billion non-UK asset threshold, which is deemed to be operating as intended.
Call for evidence on access to finance: The government has publishedopens in a new tab a call for evidence on the experiences of small businesses applying for and accessing debt finance in the UK. Feedback received will help to assess whether existing policies are fit for purpose in supporting economic growth.
Asset managers and alternative firms supervisory strategy: The FCA has releasedopens in a new tab updated supervisory priorities for asset managers and alternatives firms. This year it will focus on private markets, resilience against market disruption and securing good outcomes for consumers. The FCA notes that it has observed growth in specific subsectors, including private credit and infrastructure, and in certain products such as ETFs and Model Portfolio Services (MPS). The FCA's policy work will look to "strengthen and streamline" regulatory and data frameworks and "take forward ideas to reduce the regulatory burden". The FCA will engage with industry on the UK AIFMD review this year.
FCA review on private asset valuation: The FCA has published the findingsopens in a new tab of its review on private asset managers’ valuation processes and governance arrangements. While the review focused on asset managers, the findings will also be relevant to other firms, including insurers, that are increasingly investing in alternative assets. For more information, see the article above.
Authorised fund applications: The FCA has providedopens in a new tab wide-ranging guidance on its expectations of authorised fund applications. The document provides useful information on the FCA's expectations of applications in general and specific areas, as well as examples in areas such as fund names, investment objectives, stress testing and benchmarks.
Vote Reporting Group consultation feedback: The Vote Reporting Group (VRG) has published a Feedback Statementopens in a new tab with an agreed voluntary vote reporting template for asset managers to be taken forward and owned by the Pensions and Lifetime Savings Association (PLSA). The final template is expected to be operationally ready for use by asset managers from early 2026. The PLSA’s accompanying FAQopens in a new tab document sets out some suggested next steps for firms. Asset managers can consider reviewing their existing approach to reporting and how this is likely to change given the newly agreed voluntary template. They may also wish to engage with asset owners to understand their expectations.
Primary Market Bulletin 54: The FCA has seen an increase in instances where material information on live M&A transactions appears to have been deliberately leaked to the press. The bulletinopens in a new tab outlines the responsibilities of issuers and advisers, and best practices in mitigating unlawful disclosure and limiting market abuse.
Liquidity risk management at wholesale trading firms: The FCA has publishedopens in a new tab its observations from a multi-firm review of liquidity risk management at a range of wholesale trading (sell-side) firms, particularly brokers, in scope of the Investment Firms Prudential Regimeopens in a new tab (IFPR). The review sets out the good and poor practices which similar firms can reference to strengthen their approach to liquidity risk management. The areas covered are governance and risk culture, stress preparedness, contingency funding plans and wind-down plans, and liquidity risk management capabilities.
Bond consolidated tape: The FCA has started the process of appointing a bond consolidated tape (CT) provider with the publishing of tender noticeopens in a new tab. The aim of the CT is to provide investors with high quality prices and volumes data on of bond trades in a timely basis, and ensure it is accessible in a cost-effective way. The FCA aims to appoint a provider by the end of 2025.
PRA regulatory reporting: The PRA has issued an updateopens in a new tab on insurance regulatory reporting. It has received feedback from firms and identified issues that are listed in both the taxonomy known issues log and validations deny list. It has also published an updated version of its reporting Q&A document to provide relevant guidance to firms on reporting topics. The documents will be updated on a regular basis and firms can continue to submit reporting and validation queries to the PRA.
Publicising enforcement action: The FCA has confirmed its intention to amend significantly its proposals on publicising enforcement investigations. This action is being taken in response to industry and government objections to the previous proposals. In a letteropens in a new tab to the Financial Services Regulation Committee, the FCA outlined its intention to stick to the existing exceptional circumstances test to determine whether it should publicise investigations. However, the FCA will proceed with measures where there was broader support: (i) reactively confirming investigations which are officially announced by others, (ii) public notifications focussed on potentially unlawful activities, and (iii) publishing greater detail of issues under investigation on an anonymous basis. The FCA's policy statement is expected at the end of June.
UK approach to regulation and supporting growth: The government has publishedopens in a new tab a policy paper with actions it will take to ensure that UK regulators and regulation support growth. Addressed to all UK regulators (not just those responsible for financial services), it summarises the current challenges and proposes three actions that it hopes will deliver growth. This is the latest government intervention on this topic, which further underlines the shift towards a deregulatory agenda that is beginning to manifest for UK financial services.
Approval of UK-Swiss Mutual Recognition Agreement (MRA): On 21 March, the Swiss Parliament approved the financial services MRA with the UK. This is expected to come into force at the beginning of 2026. Read further insights on the MRA here.
UK roundtable on investment and growth: The UK Chancellor of the Exchequer, Rachel Reeves, and the President of the European Bank for Reconstruction and Development (EBRD), Odile Renaud-Basso, met with some of the UK's largest financial services firms to discuss investment and growth. The discussionopens in a new tab focused on how FS firms can work better with developmental institutions such as the EBRD and invest further in emerging markets. The roundtable was used to launch the “London Coalition on Sustainable, Sovereign Debt”, promote private investment and discuss a new Institutional Investor Taskforce.
Diversity and Inclusion in Financial Services: The PRAopens in a new tab and FCAopens in a new tab have written to the Treasury Committee to confirm that they will no longer issue new rules on diversity and inclusion to reduce regulatory burden and duplication. There is already an active legislative agenda in this area including gender action plans under the Employment Rights Bill, and disability and ethnicity pay gap reporting under the expected Equality (Race & Disability) Bill. The regulators still note that appropriate focus on diversity and inclusion in the culture of the firms they regulate can deliver improved internal governance, decision-making and risk management – and that this can support both safety and soundness, through reduced risk of group-think, and the competitiveness of UK financial services over the medium- to long-term. The FCA will continue to prioritise its work on non-financial misconduct.
Customers in vulnerable circumstances: The FCA has published the outcome of its review into the treatment of customers in vulnerable circumstances (CiVCs). It finds that, whilst many firms had taken positive action and made good progress in supporting CiVCs, areas for improvement remain. Issues have been identified in outcomes monitoring, customer support, customer communications and product and service design. Most notably, the FCA finds that most firms are unable to show how they effectively monitor and take action on outcomes for CiVCs and cannot demonstrate how the needs of CiVCs are embedded into their product and service design processes. The FCA report also provides examples of good and poor practice against its key expectations – governance and outcomes monitoring, consumer support, consumer understanding, and products and services.
Mortgage access: The FCA has announcedopens in a new tab steps to improve access to mortgages in the UK, reminding lenders of the flexibility in its rules regarding interest rate stress testing. It will launch a call for evidence on current and alternative approaches to stress testing and will consult on ideas to simplify its rules to benefit mortgage consumers. This will be followed in June by a public discussion on the future of the mortgage market, to consider aspects such as risk appetite, alternative affordability testing, lending into later life and consumer information needs. The initiative forms part of the work outlined in January in a letteropens in a new tab to the Prime Minister, in response to his request for “concrete proposals on how to go further to prioritise growth and facilitate investment, supported by government”.
Motor finance update: The FCA has announced that it plans to consult on an industry-wide redress scheme if it determines that motor finance customers have suffered from widespread firm failings, based on the Supreme Court's decision on discretionary commission arrangements (DCA). This step is being taken in the interests of providing as much certainty to key stakeholders as is possible. Within six weeks of the Supreme Court judgement, the FCA will confirm whether a redress scheme will be proposed and, if so, how it will be implemented. The FCA's next steps on non-DCA complaints will also be informed by the outcome of the Supreme Court case. Further insights on the FCA’s motor finance work can be found here and here.
FOS Q3 2024/2025 complaints data: The FOS has publishedopens in a new tab its most recent data which shows a 40% increase in complaints when compared to Q3 2023/24. The most complained-about product in the quarter was hire purchase (motor) which rose due to complaints about motor finance commission arrangements. This is also likely the driver for the significant increase in complaints submitted on behalf of consumers by professional representatives – 47% of the complaints received, compared to 21% in the first nine months of 2023/24. Complaints about current accounts and credit cards also remain at a high level.
Ongoing advice services: The FCA has concludedopens in a new tab its review of ongoing advice services following the launch of an information request in February 2024. It has found that financial advisers were delivering suitability reviews in the vast majority of cases examined. The FCA expects advisers to consider its findings and will carry out a further review of the ongoing advice rules later in 2025.
Master Trust supervision: TPR has announcedopens in a new tab a change in its approach to the supervision of master trusts in order to identify market and saver risks earlier and enhance the pensions system. The new approach involves dividing schemes into four segments based on their risk profiles and assigning dedicated multi-disciplinary teams to monitor them. TPR aims to have more targeted interactions with schemes, using real-time data to address potential risks and improve regulatory compliance. This shift reflects TPR's move towards a more prudential style of regulation, focusing on addressing risks not just at an individual scheme level, but also those which impact the wider financial ecosystem.
Data strategy: TPR has launchedopens in a new tab a new strategy aimed at improving data practices. The strategy aims to benefit pension schemes, savers and the economy by increasing efficiency, enhancing innovation and reducing regulatory burden. TPR highlights the importance of good data for investment and governance decisions, noting that poor data quality leads to inconsistencies, increased costs and security risks. The strategy includes setting clear standards and expectations for data, modernising data collection methods and collaborating with industry to facilitate data access and sharing. TPR is also committed to adopting new technologies, including AI, to improve efficiency and enhance saver outcomes.
Future of the PSR: The government has announcedopens in a new tab its intention to consolidate the PSR and its functions primarily within the FCA. The FCA will take on responsibility for ensuring the payments landscape promotes innovation and competition, as well as supporting the interests of consumers and businesses. The government will consult on the details in Q3 2025 and will legislate as soon as possible. Until that point, the PSR’s statutory powers, remit and ongoing work programme will continue.
Card fees: The PSR has publishedopens in a new tab the final report for its market review into card scheme and processing fees, concluding that there are ineffective competitive constraints in the supply of scheme and processing services to acquirers and merchants in the UK. The review finds that Mastercard and Visa have increased their core scheme and processing fees by at least 25% since 2017, costing businesses at £170 million or more annually. There is limited evidence of changes to justify these increases, and no evidence of a comparable increase in the quality of service. The review also highlights the fact that unclear fee information has led to costs for acquirers and merchants, including small retailers. The PSR will consult on potential remedies to address these issues.
Contactless payments limits: The FCA has announcedopens in a new tab a review into contactless payment limits, and is seeking views on approaches to provide Payment Service Providers (PSPs) with greater flexibility to decide contactless limits, while also managing fraud risks. Options include (i) removing the £100 limit on individual payments, (ii) allowing payment Service Providers (PSPs) to take a risk-based approach to contactless payments, (iii) significantly increasing existing regulatory contactless limits, or (iv) removing them entirely. The FCA wants to understand whether to prioritise changes to contactless limits under the existing framework or hold off until there is wider legislative reform.
Digital wallets: The FCA and PSR have publishedopens in a new tab a feedback statement on their joint call for input on Big tech and digital wallets. They identify plenty of opportunity in the growth of digital wallets – but not without with some challenges and risks. The statement highlights the significant benefits to consumers, such as increased convenience, enhanced security measures, and greater financial inclusion offered by digital wallets. However, there are concerns about the potential impacts on competition, and a need for improvements to enable new players to enter the market and foster innovation. The FCA and PSR will work with HMT and the CMA to address the issues highlighted.
Next steps for Digital Gilt: HMT has launchedopens in a new tab the procurement process for its new Digital Gilt Instrument (DIGIT) and wider next stepsopens in a new tab on the testing of DLT within the UK gilt market. The DIGIT was initially announced in November 2024 and will be issued within the new Digital Securities Sandbox. These actions seek to test the overall demand for and use of DLT.
FCA announcement on sustainability and UK defence: The FCA has published a statementopens in a new tab clarifying that its sustainability rules do not prevent investment in or financing of defence companies. Instead, its rules are designed to increase the transparency and quality of sustainability information, allowing consumers to make informed decisions. There are no FCA sustainability rules that stop banks from serving defence clients – banks may have their own defence-related policies in place, which some describe as part of their sustainability disclosures.
EU ‘Omnibus’ initiative: The European Commission has publishedopens in a new tab its first ‘Omnibus’ initiative, containing a series of proposals to simplify sustainability reporting and disclosures. Measures include reducing the scope of and delaying reporting obligations under the Corporate Sustainability Reporting Directive and EU Taxonomy, and delaying implementation of the Corporate Sustainability Due Diligence Directive. While not a UK regulatory initiative, it will impact many UK firms as the scope of the requirements includes non-EU parent companies. More information can be found here. For queries in the UK, please reach out to
Richard.Andrews@kpmg.co.uk, Begona.Ramos@kpmg.co.uk, Myra.Doyle@kpmg.co.uk, Danny.Clark@kpmg.co.uk, Keith.Thompson@kpmg.co.uk
Useful information:
The KPMG Regulatory Barometer helps firms identify key areas of pressure across the evolving UK and EU regulatory landscape and measure the impact of the likely change
The KPMG Financial Services Regulatory Insight Centre monitors and tracks the evolving regulatory landscape. If you would like to discuss any of the topics covered in more detail, please contact a member of the team below:
