REGtape UK | October 2025
Published on 13th October 2025
Developments in financial services regulation in the UK
Welcome to the autumn 2025 edition, reflecting on developments and emerging themes in UK financial services over the past quarter, with a focus on the retail banking, investments, wealth and fintech sectors.
The Financial Conduct Authority (FCA) had a busy third quarter, not least at the start of the period in July when several new policy statements, consultation papers and updates were released.
Notwithstanding this, there has been a more considered approach over recent months in regulatory developments in these sectors, with the FCA dropping proposals to bring portfolio managers within the scope of its sustainability disclosure requirements (SDR), abandoning "naming and shaming" and scaling back significantly on the scope of non-financial misconduct (NFM).
This reassessment is likely to have been largely driven by ongoing global geopolitical uncertainty against the backdrop of the UK government's growth and deregulation agenda. Growth and regulation can at times make uneasy bedfellows, however, as the latter usually introduces friction, processes and compliance requirements. Consequently, it is difficult for now to predict how the regulatory landscape will pan out for the rest of 2025.
By the new year, there will also be a fuller picture of the reception and implications of the FCA's consultation on a proposed compensation scheme for motor finance customers. The consultation is open until 18 November for comments on the regulator's redress scheme – and until 4 November on proposals to further extend how long firms have to provide a final response to motor finance complaints. The FCA says it will confirm by 4 December whether it will extend the deadline.
If the FCA decides to introduce a redress scheme, it expects to publish a policy statement and final rules by early 2026; however, this is dependent on the feedback and involvement of firms and stakeholders. The scheme would launch at the same time, with consumers starting to receive compensation later in 2026.
In the meantime, this edition considers the long-awaited clarification on NFM, consultations on the future of the financial ombudsman, HM Treasury's proposals to amend the appointed representatives regime, and more.
UK FCA aligns conduct rules in banks and non-banks for serious non-financial misconduct
The UK financial regulator has confirmed that bullying, harassment and violence constitute NFM. The FCA in a policy statement released in July, which aims to promote consistent handling of NFM and promote trust and integrity within the financial services industry.
When will the new rules come into effect and how many regulated firms are expected to be captured?
HM Treasury, FCA and FOS consult on reforms to the ombudsman and redress system
Having faced widespread criticism in recent years for its current approach, the Financial Ombudsman Service (FOS) has been the subject of two consultations launched in July regarding its operation: one from the HM Treasury and the other held jointly by the ombudsman with the FCA on modernising the redress system.
Do the proposals go far enough, which ones potentially go too far and what, in the meantime, should firms do to proactively identify and resolve issues?
HM Treasury consults on consolidating UK Payment Systems Regulator into FCA
Open until 20 October, HM Treasury's consultation follows the UK government's regulatory action plan published in March to reduce the complexity of the UK's regulatory environment.
What can firms expect and will this simplify the payments regulatory landscape in the UK?
Regulators propose reform to the UK senior managers and certification regime
Three consultations on phased reform for the senior managers and certification regime (SMCR) have been published. These aim to streamline the SMCR and address some practical challenges while maintaining a regime of individual accountability.
What is the detail of the changes in the first two phases and why is real reform still a way off?
HM Treasury to tighten UK's appointed representatives regime
HM Treasury has concluded that there are two regulatory gaps in the appointed regime (AR) framework: ensuring that firms acting as principal for an AR are suitable and that the FOS has jurisdiction over all matters arising from AR activity.
What is HM Treasury proposing and what could this mean for the role the AR regime plays in the UK's financial services sector?
Do new FCA and HM Treasury proposals for the UK advice market hit the target?
The FCA and HM Treasury have unveiled their proposals for their "targeted support" initiative, which is designed to allow regulated firms to provide tailored suggestions to groups of consumers who share common characteristics.
A further consultation, CP 25/26, on additional consequential amendments to FCA rules to ensure that the proposals work with existing requirements, will close on 17 October.
How will targeted support work in practice, and which FCA permissions will firms need?
FCA consults on draft rules for buy-now, pay-later credit in the UK
The UK financial regulator has published its consultation on draft rules which will apply to "buy now, pay later" products – now defined as "deferred payment credit" (DPC), enabling firms to compete on transparency, simplicity and customer journeys.
How can lenders prepare to comply and why is the DPC regime expected to have a positive impact on the industry?
FCA listens to payment industry as it sets out its path on 'safeguarding' in the UK
A long-awaited policy statement from the FCA has set out final rules and guidance for an improved and enhanced safeguarding regime published.
What changes are being introduced by the regime and when will it come into effect?
Supreme Court hands down judgment in UK motor finance commission case
The UK Supreme Court in August finally handed down a much-anticipated judgment in Johnson v FirstRand Bank Limited t/a MotoNovo Finance.
The issues before the Supreme Court went to the heart of the motor finance business model, where lenders pay motor dealers commission for introducing finance products to customers.
What impact could the judgment and the FCA's subsequent announcement have on the lending market?
