Regulatory Updates October 2025

 

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

In this issue we cover:

• Denmark loses £1.4 billion tax-fraud claim in UK High Court;
• FCA and PRA finalise major remuneration reforms;
• FCA consultation on fund tokenisation framework;
• FCA to become sole AML/CTF supervisor for professional services;
• FCA emphasises governance and culture through ‘doing the right thing’; and
• FCA cutting red tape under new capital rules for investment firms.

 

Denmark loses £1.4 billion tax-fraud claim in UK High Court

On 2 October 2025, the UK High Court (Commercial Court, King’s Bench Division) dismissed a civil claim brought by the Danish tax authority Skatteforvaltningen (SKAT) seeking to recover approximately £1.4 bn in alleged dividend tax refund losses from a trading scheme between 2012 and 2015. The long running case, Skatteforvaltningen v Solo Capital Partners LLP & Others, represents one of the largest fraud related claims ever heard in the UK.

The judgment underscores weaknesses in SKAT’s processes for verifying refund claims and managing cross-border withholding tax arrangements. It also highlights weak evidence and governance can undermine recovery in complex financial markets.

Read more here

 

FCA and PRA finalise major remuneration reforms

The FCA and PRA confirmed significant changes to remuneration rules for dual-regulated firms following extensive consultation. The reforms aim to improve proportionality while maintaining strong governance standards for senior managers and material risk takers. Key changes include shorter deferral periods, increased flexibility in bonus structures and closer alignment between the PRA and FCA remuneration frameworks to remove duplication.

Firms should review their remuneration policies ahead of upcoming performance years to ensure compliance and avoid legacy provisions that may now be outdated. This should include reassessing deferral arrangements, bonus allocation structures and governance oversight to reflect the streamlined approach under the new regime.

 

FCA consultation on fund tokenisation framework

The FCA published a consultation paper outlining proposals for authorised funds to adopt distributed ledger technology (DLT). The consultation introduces the concept of tokenised fund units and seeks to permit funds to maintain digital registers while offering investors direct participation models. The initiative supports innovation and operational efficiency across the UK’s fund management industry in line with the government’s broader digital finance strategy.

Firms should assess the potential operational, governance and risk management implications of adopting tokenised structures. Even firms not immediately considering implementation should monitor developments closely, as tokenisation is expected to play an increasing role in market infrastructure and product design over the coming years.

 

FCA to become sole AML/CTF supervisor for professional services

It was confirmed that the FCA will assume sole supervisory responsibility for anti-money laundering (AML) and counter terrorist financing (CTF) regulation across the legal, accounting and trust company service provider sectors. The move consolidates oversight previously shared between multiple professional body supervisors and is intended to create greater consistency and accountability within the UK’s AML regime.

Firms engaging with or operating alongside these sectors should review their AML frameworks, governance arrangements and reporting processes in preparation for the transition. Early readiness work, including gap analysis and governance mapping, will help ensure smooth adaptation once FCA supervision begins.

 

FCA emphasises governance and culture through ‘doing the right thing’

The FCA used an October speech to reiterate its commitment to fostering strong governance and ethical cultures across the financial services industry. The regulator highlighted that firms are expected not only to meet minimum regulatory standards but to demonstrate proactive governance, effective escalation processes and accountability from senior leadership. It also noted that firms showing openness and early remediation may see more favourable regulatory outcomes.

Firms should ensure their governance, conduct and escalation frameworks reflect this cultural approach. Keeping a tone from the top and clear accountability with remediation will be important in staying in line with the FCA’s expectations from firms.

 

FCA cuts red tape under new capital rules for investment firms

The FCA announced a major simplification of its capital-adequacy framework for investment firms, reducing this part of the rulebook from approximately 44,000 to 13,000 words. While the core capital requirements remain unchanged, the revised structure aims to make obligations clearer and more accessible. This forms part of the FCA’s wider regulatory reform agenda and will take effect from 1 April 2026.

The regulator stated that these changes will help firms better understand and apply capital rules while maintaining appropriate prudential standards. Firms should review their internal documentation, capital policies and reporting processes ahead of implementation to ensure alignment with the streamlined Rulebook and to take advantage of any administrative efficiencies offered by the new structure.

 

Please contact us at info@objectivus.com if you have any questions or require further clarity on any of the points raised.