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3to2 - 10 Key Focus Areas For Financial Services Firms 2025_alev-takil-7ojyp-IXW7w-unsplash_50034

In this publication and podcast series, we explore some of the core focus areas for UK-regulated financial services firms in the year ahead.

In 2024, we saw disruption to the regulatory reform agenda as the unexpected timing of the general election impacted work and publication schedules. Now that the reform agenda is back on track and aligned to the new government’s plans for growth, we are likely to see improved progress on existing reforms as well as fresh initiatives in the pursuit of growth during 2025.

There is doubtless a strong focus on retail markets under the new government, but the UK’s competitiveness as a place to do business remains vital as improvements to the UK’s wholesale markets continue. ESG and AI continue to dominate across the sector as rapidly evolving areas that profoundly impact the regulatory landscape.

Amazing London skyline with Tower Bridge during sunset

The proposals aim to drive more consistency in operational incident reporting and greater visibility in the use of material third-party services.

By Rob Moulton and Charlotte Collins

On 13 December 2024, the FCA and the PRA published linked Consultation Papers on operational incident and third-party reporting (FCA CP24/28 and PRA CP17/24). The consultations aim to create a structured framework for financial services firms to report operational incidents and material third-party relationships. The proposals will help standardise the information that the regulators receive and enable them to identify systemic problems related to incident and third-party risk management.

Amazing London skyline with Tower Bridge during sunset

The new regime will take effect on 1 January 2025, but will not diminish the responsibilities of financial services firms relying on the services of critical third parties.

By Rob Moulton, Fiona Maclean, Alain Traill, and Charlotte Collins

On 12 November 2024, the PRA, FCA, and Bank of England jointly published a Policy Statement (PRA PS16/24 and FCA PS24/16), setting out their final rules for critical third parties (CTPs). The regulators consulted on this framework in December…

Cloudless day at financial district of London

Fighting financial crime, protecting consumers’ needs, and bolstering wholesale markets are the regulator’s key priorities for the year ahead.

By Rob Moulton, Nicola Higgs, Becky Critchley, and Charlotte Collins

On 19 March 2024, the FCA published its Business Plan for 2024/25, setting out its priorities for the year ahead. While the Business Plan now takes on less significance than it did historically given other publications in circulation such as the FCA’s 3-year Strategy and the Regulatory…

Cloudless day at financial district of London

Critical Third Parties serving the UK financial sector must ready themselves for compliance with the newly proposed operational resilience requirements.

By Rob Moulton, Fiona Maclean, and Charlotte Collins

On 7 December 2023, the PRA, FCA, and BoE jointly published a Consultation Paper (PRA CP26/23 and FCA CP23/30) which proposes a set of regulatory requirements and expectations for critical third parties (CTPs) that provide services to authorised persons, relevant service providers, and financial market infrastructure entities (FMIs). The key aim of the proposals is to manage potential risks to the stability of, or confidence in, the UK financial system that may arise due to a failure in, or disruption to, the services that a CTP provides to such entities.

The Future Regulatory Framework and Consumer Duty will be key areas of focus for the coming year.

By Rob Moulton, Nicola Higgs, David Berman, Becky Critchley, and Charlotte Collins

On 5 April 2023, the FCA published its Business Plan for 2023/24. The Business Plan sets out a number of priority areas for the regulator, tied into its three main areas of focus: reducing and preventing serious harm, setting and testing higher standards, and promoting competition and positive change.

The FCA highlights four of these priority areas that will receive additional emphasis over the coming year. These priority areas indicate a strong focus on developing the Future Regulatory Framework, including consulting on Handbook Rules to replace elements of onshored EU legislation as well as progressing the Edinburgh Reforms; and on consumer protection, including effectively implementing the new Consumer Duty.

Monitoring the progress of the Financial Services and Markets Bill and regulatory divergence between the UK and the EU will continue as a key theme in 2023. 

The Financial Services and Markets Bill leaves a significant amount of the essential regulatory detail to be developed later by HM Treasury (through regulations), followed by development of the specific rules by the regulators. Therefore, firms operating in the financial services sector will face legal and regulatory uncertainty as to the UK’s regime…

As the FCA’s remit continues to grow, the regulator pledges flexibility in the face of global financial and geopolitical headwinds.

By Rob Moulton, Anne Mainwaring, Jaime O’Connell, and Dianne Bell

On 7 April 2022, the FCA released its new Business Plan as part of a package including  a three-year strategy document setting out the outcomes it expects all firms to deliver across UK markets. In his introductory message, FCA Chief Executive Nikhil Rathi noted that the regulator’s broad and growing remit means “prioritisation is inevitable”. The FCA’s more outcomes-based approach means its commitments for the next three years fall into three stated areas of focus:

  1. Reducing and preventing serious harm: for example, protecting consumers from harm caused by authorised firms, including tackling fraud and poor treatment. The FCA expects to “harness data to assess problems more quickly”, with the aim of preventing harm from happening in the first place.
  2. Setting and testing higher standards: for example, focusing on the impact authorised firms’ actions have on consumers and markets. The FCA expects the new Consumer Duty to give firms greater certainty about how they should treat consumers as well as flexibility on how they deliver good outcomes.
  3. Promoting competition and positive change: greater regulatory open-mindedness, for example, by building on the globally copied “sandbox” and introducing a “scalebox”.

This annual publication outlines some of the primary focus areas in 2022 for UK-regulated financial services firms. There has been a marked shift away from dealing with immediate post-Brexit priorities to more fundamental consideration of the direction of travel of UK financial services regulation, and this is borne out across many of the topics covered in this year’s publication.

While monitoring regulatory divergence between the UK and the EU will be a key theme for 2022, other familiar topics will…

An FCA report evaluates the chequered implementation of technology change and identifies risks and best practices to help firms better navigate this change.

By Andrew C. Moyle, Alain Traill, and Jagveen S. Tyndall

Of the nearly 1,000 “material incidents” reported to the UK’s Financial Conduct Authority (FCA) in 2019, 17% were caused by change-related activity. It was against this backdrop that, on 5 February 2021, the FCA set out the findings of its review entitled Implementing Technology Change regarding the execution of technology change within the financial services sector (the Report). While the Report focuses on the UK, its findings apply equally to financial services organisations implementing technology change across all geographies.