Regulatory Updates September 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:

• FCA proposes easing of Consumer Duty for wholesale firms
• FCA consults on applying existing rules to crypto asset firms
• FCA emphasises a risk-based approach to crypto asset firms
• Bank of England and PRA simplify data reporting requirements
• FCA cuts more data reporting to benefit 11,000 firms

 

FCA proposes easing of Consumer Duty for wholesale firms

The FCA has announced plans to revise aspects of its Consumer Duty framework following industry feedback that the current rules place an excessive administrative burden on wholesale market participants.

In a letter to Chancellor Rachel Reeves, FCA Chief Executive Nikhil Rathi confirmed that the regulator intends to amend the rules to ensure they remain proportionate, particularly for firms that have no direct retail exposure. The proposed changes will seek to ‘remove disproportionate burdens from wholesale firms and give them confidence to act proportionately.’

The FCA will also review the client categorisation framework, including clearer and potentially higher thresholds for determining professional client status. This may include a new test at a high threshold of assets, providing a clearer line between retail and professional clients.

Trade associations UK Finance and AFME welcomed the move, stating that it would help reduce uncertainty, support innovation, and maintain the UK’s global competitiveness while safeguarding positive outcomes for consumers.

Firms operating in wholesale markets should monitor forthcoming consultation papers closely and assess how any amendments to the Consumer Duty and client categorisation standards could affect their product governance and distribution frameworks.

FCA consults on applying existing rules to crypto asset firms

The FCA launched a consultation outlining how existing regulatory requirements, including the Senior Managers and Certification Regime (SMCR), SYSC, and financial promotions rules, will apply to crypto asset firms authorised under the Financial Services and Markets Act 2000.

The consultation aims to ensure a consistent supervisory approach and align crypto asset entities with broader financial sector standards. This follows the Treasury’s expansion of the FCA’s remit to cover crypto trading and custody activities.

Firms operating or entering the crypto asset market should prepare for higher compliance expectations, particularly regarding governance, conduct and risk management. Establishing clear accountability structures and ensuring appropriate systems and controls will be critical for compliance once the regime is finalised.

 

FCA emphasises a risk-based approach to supervision

The FCA reiterated its commitment to a risk-based supervisory approach, focusing on areas where consumer harm or market disruption could be most significant. This approach seeks to improve resource allocation, enabling the regulator to prioritise high-impact risks while reducing unnecessary burdens on lower-risk firms.

In recent updates, the FCA has highlighted that effective supervision relies on firm-led accountability, particularly under SMCR. Senior managers should ensure that governance frameworks, monitoring processes and escalation channels remain proportionate and responsive to evolving risk profiles.

Firms are encouraged to regularly reassess their internal risk assessment methodologies and ensure that compliance monitoring plans align with the FCA’s evolving supervisory focus.

Bank of England and PRA simplify data reporting requirements

The Prudential Regulation Authority (PRA) has announced a major simplification of banking data reporting as part of the Future Banking Data initiative. The proposed changes include the removal of 37 templates from EU regulations, aiming to reduce regulatory burdens without compromising supervisory oversight.

This reform forms part of a broader effort to modernise the UK’s prudential data infrastructure, enhancing efficiency and accuracy in regulatory submissions.

Firms should review the PRA’s consultation and consider how these changes will affect their existing data management and reporting processes. Early engagement will help identify opportunities to streamline operations while maintaining data integrity and compliance readiness.

FCA cuts more data reporting to benefit 11,000 firms

The FCA published a proposal on 10 September to reduce the reporting frequency of selected sections of the Retail Mediation Activities Return (RMAR) for retail intermediaries. Under this proposal, the RMAR sections covering professional indemnity insurance, training & competence and pension transfer advice would move from quarterly or biannual submission to an annual schedule. The consultation closes on 15 October 2025. This measure is part of the Transforming Data Collection programme, which has already reduced reporting burdens to over 36,000 firms. (see here for more information)

This change reflects the FCA’s continued push toward proportionate data collection and its ‘smarter regulator’ stance. Cutting unnecessary reporting for lower-value fields allows firms to focus compliance resources where most needed, while preserving oversight on core metrics. Jessica Rusu (Chief Data, Information & Intelligence) emphasised that the aim is to ‘focus only on essential information’ and ease the burden without compromising regulatory objectives.

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