Regulatory Updates March 2025

 

Our regulatory newsletter aims to provide insight into the previous month’s changes and updates which may consequently have an impact on your firm’s business. At Objectivus, we are positioned to provide context and support for firms working to understand such changes.

 

In this issue we cover:

• Market Bulletin 54: Leaks of Inside Information
• First Enforcement Action against a RIE
• PSA Abolished and Absorbed into the FCA
• Five Year FCA Strategy
• FCA Proposes Reforms to Investment Manager Rules
• HM Treasury – A New Approach to Growth

 

Market Bulletin 54: Leaks of Inside Information

The Financial Conduct Authority (FCA) publication of Primary Market Bulletin 54 focused on the issued of strategic leaks and unlawful disclosure. The FCA has raised concerns over a rise in leaks of inside information during live M&A transactions, particularly where confidential discussions or potential revised offers are disclosed. These leaks often qualify as inside information under Article 7 of UK MAR and have led to notable share price movements.

Leaks fall into two categories:

• Inadvertent leaks: Indirect or suggestive disclosures of sensitive information, even without specifics.
• Strategic leaks: Deliberate sharing of inside information with the media, typically to influence deal dynamics.

Both undermine market integrity and can distort pricing. The FCA warns that a culture of strategic leaking may be taking hold and stresses that unlawful disclosure, unless part of normal duties, breaches Article 14 of UK MAR. Penalties include unlimited fines, injunctions, and prohibitions.

Firms should be taking steps to ensure that they:

• Implement strong controls around inside information;
• Promote a culture of integrity and confidentiality;
• Ensure all relevant individuals understand their legal responsibilities.

 

First Enforcement Action against a RIE

The FCA fined the London Metal Exchange (LME) £9.2 million. It’s first enforcement action against a Recognised Investment Exchange for failing to ensure adequate systems and controls during extreme market stress in March 2022, when nickel prices more than tripled. The FCA found that LME staff were not properly trained to identify or escalate disorderly trading, compromising market orderliness. While LME has since taken corrective actions, including an independent review, the FCA highlighted the serious internal control failures. LME received a 30% settlement discount, reducing the fine from £13.2 million to £9.25 million. The final notice provides the full details.

 

PSA Abolished and Absorbed into the FCA

The UK Government has announced that the Payment Systems Regulator (PSR) will be abolished, with its responsibilities primarily consolidated into the FCA. This move aims to reduce regulatory burdens, particularly on smaller businesses, and streamline oversight by eliminating the need to engage with multiple regulators.

Part of the Government’s broader Plan for Change, the reform is designed to boost economic growth, encourage innovation, and raise living standards by cutting red tape. Prime Minister Keir Starmer and Chancellor Rachel Reeves emphasised that overregulation has stifled investment and innovation, and pledged to make regulation support—not hinder—business growth.

Though the PSR’s statutory powers remain for now, legislation will be introduced to formalise the changes. Meanwhile, the PSR and FCA will coordinate to ensure a smooth transition and maintain market competitiveness.

This announcement builds on the Government’s wider deregulatory agenda, which includes planning reforms, financial services reviews, and environmental regulation overhauls.

 

Bold Five Year FCA Strategy

The FCA has outlined its ambitious five-year plan, focused on driving economic growth, improving consumer outcomes, and becoming a smarter, more agile regulator.

At the heart of the strategy are four core priorities:

• Smarter regulation – embracing technology and streamlining processes to be more efficient, predictable, and proportionate.
• Supporting sustained economic growth – enabling innovation and investment to maintain the UK’s global leadership in financial services.
• Helping consumers navigate financial lives – improving access to information, boosting trust, and supporting better financial decisions.
• Fighting financial crime – targeting bad actors and strengthening firms’ ability to act as a first line of defence.

The FCA plans to modernise supervision by reducing burdens on compliant firms, digitising and simplifying authorisations, and reviewing enhanced data requirements. It will also invest in technology and talent, enabling faster, more assertive action where harm is greatest.

This builds on major achievements like the Consumer Duty, sweeping listing reforms, and keeping potentially harmful firms out of the sector. Looking ahead, the FCA will launch Open Finance, building on the success of Open Banking to deliver greater innovation, choice, and lower costs for consumers.

With the integration of the Payment Systems Regulator underway, the FCA is positioning itself as a future-ready regulator, committed to fostering trust, innovation, and a stronger financial system for all.

 

FCA Proposes Reforms to Investment Manager Rules

The FCA has published a consultation setting out proposed reforms to the UK’s regulatory regime for alternative investment managers, with the intention of supporting sustainable growth and reducing unnecessary operational barriers. This marks another step in the regulator’s broader ambition to streamline its rulebook and align its oversight with firm size, risk, and activity, whilst not compromising investor protection or market integrity.

Through the consultation, the FCA outlines a more proportionate approach to regulating fund managers, particularly those operating under the UK AIFMD framework. The proposals reflect a shift towards more adaptable and outcomes-centric regulation, making it easier for new entrants and smaller firms to compete, while still ensuring that core standards are upheld. Firms are encouraged to review the FCA’s proposals to reform rules for investment managers and to consider how these changes may affect internal governance, reporting and compliance infrastructure.

This development signals a continued regulatory pivot toward supporting innovation in financial services. Thus, risk and compliance teams should monitor how such changes might influence future supervisory expectations and authorisation processes.

 

HM Treasury – A New Approach to Growth

HM Treasury has set out a new policy direction that will have significant implications for the UK’s financial regulatory framework. In its policy paper, A new approach to ensure regulators and regulation support growth, the Treasury outlines how it expects regulators, including the FCA, to contribute more directly to the UK’s economic strategy by fostering a regulatory environment that supports innovation, investment and long-term competitiveness.

The paper challenges the prevailing regulatory culture, identifying excessive complexity and a fragmented approach as key barriers to growth. It calls for clearer accountability, more proportionate oversight and improved coordination between regulatory bodies. Although the document does not itself introduce new rules, it sets a clear tone for future expectations, particularly in terms of how regulators demonstrate their impact on business productivity and market confidence, this is highlighted by the statement: “we commit to cut administrative costs for business by 25% by the end of the Parliament. ”

Firms should take note of the Treasury’s proposed approach to aligning regulation with economic growth, especially as the FCA continues to adapt its supervisory model. Compliance and risk professionals may find this shift leads to more principles-based regulation and greater emphasis on justifying internal controls in proportion to actual business risk.

 

Please reach out to info@objectivus.com if you have any questions or require further clarity on any of the points raised.