Financial Services SpeedRead: 14 August 2025 edition

Welcome to the latest edition of the Financial Services SpeedRead, a collection of bite-sized updates designed to help you keep on top of key regulatory developments in financial services over the preceding fortnight. Please get in touch if you want to explore any of the topics covered in this fortnight's edition of Financial Services SpeedRead in more detail.

Financial Markets

1.  FCA publishes findings of its multi-firm review into share buybacks in UK listed equities

On 7 August 2025, the FCA published the findings of its multi-firm review into share buybacks by UK listed equity issuers, with a particular focus on FTSE 350 companies.

The FCA found that share buybacks have become a more prominent method of capital return post-COVID-19, accounting for 42% of capital returned by FTSE 350 issuers in the three years following the pandemic, compared to 20% in the preceding three years. The review identified no material concerns with the outcomes of banks' structuring, marketing and executing share buybacks, including that no unmanaged conflicts were found in the way the structured buybacks were executed. Structured buybacks exhibited a wider range of fees, but the average fees paid by issuers were similar to those for vanilla buybacks.

Whilst the FCA considered that most of the approaches taken by banks to educate issuers on the products were reasonable, the following areas for improvement were highlighted: (i) cover all options for tailoring structured buybacks; (ii) provide more detail on how structured buybacks work; and (iii) explain potential outcomes of structured buybacks. 

2.  FCA publishes decision to fine Sigma Broking Limited for transaction reporting failures

On 1 August 2025, the FCA published a final notice (dated 29 July 2025) with its decision to fine Sigma Broking Limited (Sigma) £1,087,300 for the firm's failure to submit complete and accurate transaction reports between 2018 and 2023.

The FCA explained that incorrect system setup and weaknesses in Sigma's reporting processed led to 924,584 incorrect reports being submitted (close to 100% of transactions handled by the firm in the relevant period). As a result, Sigma was found to have breached Article 26 of UK MiFIR and Principle 3 of the FCA's Principles for Businesses, requiring firms to take reasonable care to organise and control their affairs responsibly and effectively.

This is the second FCA enforcement action against a firm for breaching UK MiFIR transaction reporting requirements. The FCA highlighted the importance of firms submitting complete and accurate transaction reports to the FCA in order to help combat financial crime.

3. FCA publishes Primary Market Bulletin 57

On 25 July 2025, the FCA published edition 57 of the Primary Market Bulletin (PMB). The PMB covers the following new items, among other things:

• Finalisation of 5 technical notes following consultation in PMB 55;
• Re-consultation on technical notes 710 on principles for sponsors, which were previously consulted on in PMBs 48 and 53;
• Highlighting the rules, guidance and related system changes for the national storage mechanism which are coming into effect on 3 November 2025. The FCA will publish further additional guidance and supporting materials before these changes come into effect;
• Highlighting upcoming updates to the delayed disclosure of inside information and persons discharging managerial responsibilities notification forms. These changes are intended to make the notification forms easier and quicker to complete, ensuring greater consistency in the information the FCA receives; and
• Consulting on further drafting changes to new guidance relating to the application of complex financial history and significant financial commitment rules for prospectuses, following the initial consultation in CP24/12.

4. FCA publishes findings of review into benchmark administrators management of data risks

On 28 July 2025, the FCA published its findings following a review in into the management of data risks by benchmark administrators. The review was conducted further to the FCA's portfolio letter of December 2024 in which it highlighted concerns regarding data quality controls, corporate governance and oversight, benchmark controls, disclosures and operational resilience.

Despite evidence of good arrangements at each firm, the review found there were varied practices overall which often  failed to support a consistently robust control environment. The FCA's review covered five key themes (i) data supplier oversight, (ii) data quality oversight, (iii) resilience and incident response, (iv) assurance/governance and (v) emerging risk awareness. 

The FCA expects all benchmark administrators to review their practices in light of these findings, and take appropriate steps to address any gaps. It will be carrying out further work later in 2025 and in 2026 on benchmark controls and corporate governance.

Banking and Prudential

5. EBA consults on revised guidelines on internal governance under the CRD framework

On 7 August 2025, the EBA published a consultation paper on its draft revised guidelines on internal governance under the Capital Requirements Directive (CRD), to reflect changes introduced by CRD VI and ensure alignment with DORA as well as the EBA's benchmarking report of diversity practices and gender-neutral remuneration policies. 

Amendments include, among other things, a requirement to ensure firms specify that each member of the management body, senior manager and key function holder is to have a documented statement of role and duties pursuant to Article 88(3) CRD VI.

The consultation period will run until 7 November 2025, following which the EBA will publish its results. The EBA will separately hold a virtual public hearing on the CRD VI governance package on the 5 September 2026 (firms can register to attend here).

6. FCA publishes findings from a review of transaction governance in wholesale banks

On 7 August 2025, the FCA published the findings of its multi-firm review into transaction governance in wholesale banks. The review assessed the governance arrangements for the 50 most recent transactions submitted to transaction governance committees by six banks.

The FCA found no "widespread weaknesses" but observed that some firms had more robust processes. 

The FCA gave some examples of good and bad practice in several areas, including:

• Risk appetite: The review found that the most robust firms demonstrated clear risk appetite awareness and strong risk ownership, particularly in financial risks, while approaches to reputational risk varied significantly. Best practice included setting out reputational risk appetite in detail, defining this qualitatively and quantitatively, with clear escalation thresholds and risk appetite monitoring. 
• Overall framework and process: Though there was variation in approach, all firms (except one) could provide an organogram and process charts in relation to transaction governance that appeared well understood. 
• Pre-committee stage: Generally, the FCA found that early-stage committees, discussions and processes were not well documented. They suggested that senior managers may want to consider whether they are comfortable with the balance between encouraging early-stage views from a range of stakeholders and tracking these discussions.
• Committee stage: The FCA noted the importance of ensuring decisions are made in quorate committees which are chaired in a way which avoids conflicts of interest. They highlighted that the best deal memos showed an explanation of the business case and risks of a transaction set out by the first line or defence, alongside challenge/enhanced risk assessment by the second line of defence. The FCA also highlighted that the content of emails approving transactions should be considered.
• Conditions: The FCA found that committees generally ensured conditions were met and that firms were using technology to enhance record keeping and tracking.
• Engagement of senior executives and the board: Better firms demonstrated evidence of comprehensive management information, though in some cases timely management information on reputational risk was not provided.
• Cross border transactions: In most cases the FCA found that UK representatives could impose conditions or veto decisions where transactions would be booked in the UK, though this was not the case in one instance.

Wholesale banks should consider whether the output of this review contains any insights that they can integrate into their transaction governance processes.

7. EBA publishes draft technical standards on the calculation and aggregation of crypto asset exposure values under CRR 3

On 5 August 2025, the EBA published its final draft regulatory technical standards (RTS) setting out harmonised capital requirements for EU institutions to calculate and aggregate exposures to crypto-assets under the Capital Requirements Regulation (Regulation (EU) 2024/1623, CRR 3).

The RTS cover the capital treatment for credit risk, counterparty credit risk, market risk, and credit valuation adjustment risk for asset reference tokens and other cryptoasset exposures, as well as unbacked cryptoassets, such as Bitcoin. The RTS also discuss technical elements on netting, aggregation of long and short positions, criteria for hedge recognition, and the formulas for calculating exposure values for counterparty credit and market risk. 

The aim is to align the RTS as much as possible with the Basel standards set out in SCO60, while also considering the Markets in Crypto Assets Regulation. The EBA has submitted the draft RTS to the European Commission for adoption.

8. ECB publishes Macroprudential Bulletin (No. 30) 

On 5 August 2025, the ECB published the 30th edition of its Macroprudential Bulletin, which seeks to provide stakeholders with insights into the ECB's work on macroprudential policy. Bulletin No. 30 addresses the ECB's capital buffers framework for other systematically important institutions (O-SIIs), which the ECB identifies as varying greatly. 

The ECB considers the heterogeneity of capital buffers to be a concern, as it suggests that buffers are being set too low for some systemic banks, as well as the risk that heterogeneity at the upper and lower ends of the spectrum may distort competition and incentives for financial integration in the single European market. 

The ECB identifies that the recent enhancements to its 'floor methodology' for enhancing O-SII buffers has been designed to mitigate any unwarranted heterogeneity at the lower end of the range, but notes that this cannot mitigate the same at the top end due to the ECB's inability to reduce macroprudential requirements for firms (but only impose higher requirements). 

9. EBA publishes consultation paper on regulatory technical standards on the content of resolution plans and group resolution plans

On 5 August 2025, the EBA published a consultation paper containing draft regulatory technical standards (RTS) on the content of resolution plans, group resolution plans, the assessment of resolvability and the operation of resolution colleges under the Bank Recovery and Resolution Directive. 

The revisions to the RTS aim to (i) simplify and streamline resolution plans; (ii) make plans more ope11rational to improve usability and implementation readiness; and (iii) increase optionality to improve the flexibility of resolution planning.

Responses are due by 5 November 2025.

10. EBA publishes draft RTS on operational risk loss framework

On 4 August 2025, the EBA published a final report setting out three RTSs under CRR 3, aimed at improving the management and reporting of operational risk losses in EU banks.

The proposed RTSs are as follows:

• RTS on establishing a risk taxonomy on operational risk that complies with international standards and a methodology to classify the loss events included in the loss data set based on that risk taxonomy on operational risk loss;
• RTS on specifying the condition of 'unduly burdensome' for the calculation of the annual operational risk loss; and
• RTS on specifying how institutions shall determine the adjustments to their loss data set following the inclusion of losses from merged or acquired entities or activities as referred to in Article 321(1) of the CRR.

The EBA has submitted the technical standards to the European Commission for adoption.

11. EBA publishes consultation paper on draft implementing technical standards for third-country branches

On 31 July 2025, the EBA published a consultation paper (2025/28) concerning draft implementing technical standards (ITS) on the supervisory reporting requirements for Third Country Branches (TCBs) under CRD VI.

The draft ITS are designed to harmonise reporting formats, frequencies and definitions across the EU, enhancing supervisory oversight of TCBs. 

The proposed framework introduces a classification system for TCBs, distinguishing between class 1 and class 2 branches. This classification adopts a "core plus supplement" approach, tailoring regulatory requirements according to the systemic relevance of each TCB. TCBs will be required to submit a core set of data, while class 1 branches (generally those that are larger or more complex) subject to additional, more detailed reporting obligations.

The EBA is accepting comments on the draft ITS until 31 October 2025.

12. PRA consults on restating UK CRR definitions in PRA Rulebook following HM Treasury revocation announcement

On 30 July 2025, the PRA published consultation paper CP19/25 on the restatement of the definitions in the UK CRR in the PRA Rulebook. 

Following HM Treasury's announcement in July 2025 of its approach to revoking the remaining provisions of the UK CRR, the PRA proposes to restate the definitions in Articles 4, 4A, 4B, and 5 of the UK CRR in the PRA Rulebook, with targeted amendments. The restatement would not result in any material change to policy. New definitions will also be introduced in the Glossary for terms that are implicitly defined in the UK CRR. Consequential amendments will be made across the PRA Rulebook and SS13/13 to reflect the new definitions. Various amendments to the interpretive guidance in the PRA Rulebook will also be made.

The consultation will close on 30 October 2025. The changes would become effective alongside the Basel 3.1 package which is expected to come into force on 1 January 2027.

13. BoE publishes consultation paper proposing to extend RT2 and CHAPS settlement hours

On 29 July 2025, the BoE published a consultation paper proposing to extend RT2 and CHAPS settlement hours, building on earlier consultations that found the current 6:00 am to 6:00 pm window inadequate for the sector’s needs.

The main proposal is to open CHAPS for settlement from 1:30 am, targeting implementation in the second half of 2027 as a step towards near-continuous settlement. The BoE is also seeking feedback on extending the CHAPS contingency window to 10:00 pm and enabling RT2 settlement during certain bank holiday weekends.

Responses to the consultation are due by 21 October 2025. In 2026, the BoE intends to publish a policy statement on the early morning CHAPS extension in early 2026, as well as phase 2 consultation on the evening contingency extension and bank holiday settlement, with a further policy statement to be published following the phase 2 paper.

14. ECB publishes revised guide to internal models under the CRR

On 28 July 2025, the ECB published a revised version of its guide to internal models used by banks to calculate how much capital they need under the CRR. The guide has been updated with respect to the following key areas:

• Machine learning: a new section specifying expectations for using machine learning techniques in internal models;
• Credit risk: updates on roll-out and permanent partial use to align with CRR 3 requirements; revised expectations on internal validation and internal audit according to the EBA's supervisory handbook on the validation of internal ratings-based rating systems; and clarifying responsibilities of senior management and management bodies in preparing submissions to the ECB for applications relating to internal models;
• Market risk: guidance on market risk is now dealt with in two chapters to reflect the supervisory expectations for market risk models under both CCR 2 and CRR 3, following the European Commission postponing the implementation of legislation on the new Basel standards; and 
• Counterparty credit risk: further detail provided around modelling the risks of trades with partners, changes in exposure and updates on maturity.

15. PRA publishes Final Notice fining Barents Reinsurance S.A. £1.78 million over governance and reporting failures

On 28 July 2025, the PRA published a Final Notice (dated 24 July 2025) and related press release, issuing a fine of £1,785,000 to the London branch of Barents Reinsurance S.A. for breaches of governance and reporting requirements between July 2021 and October 2023.

During this period, the PRA found that the London branch (among other things):

• did not adequately prepare for the UK’s post-Brexit regulatory framework, resulting in delayed compliance upon entering the Temporary Permissions Regime;
• breached Rules 2.1 and 2.5 of the Reporting part of the PRA Rulebook by failing to submit required regulatory reports between 8 April 2022 and 24 April 2023, and lacked appropriate systems and structures to meet reporting obligations;
• failed to implement a business continuity plan specific to the UK branch; and
• breached Rules 2.3 and 2.6 of the Conditions Governing Business General Governance Requirements by lacking a formal governance structure, which included the delayed establishment of a formal UK Branch Management Committee and sufficient branch-specific oversight.

Fund Management

No new entries.

Senior Managers and Governance

16.  FCA fines Woodford Investment Management and Neil Woodford nearly £46 million for failures in management of the Woodford Equity Income Fund 

On 5 August 2025, the FCA published a press release regarding its decision to fine Neil Woodford £5,888,800, and Woodford Investment Management Limited (WIM) £40,000,000, (see respective Decision Notices dated 1 July 2025 here and here), in connection with the management of the Woodford Equity Income Fund (WEIF).

The FCA's decision relates to the period between 31 July 2018 and 3 June 2019, during which the FCA considers Mr Woodford and WIM failed to act with due skill, care and diligence in their respective roles in their management of WEIF.

The FCA found that Mr Woodford and/or WIM:

• made unreasonable and inappropriate investment decisions by disproportionately selling more liquid assets and acquiring less liquid investments. This resulted in a situation where, at the time of the fund’s suspension, only 8% of WEIF’s holdings could be liquidated within seven days; 
• did not react appropriately as the fund's value declined, its liquidity worsened, and investors withdrew their money, disadvantaging investors who remained in the fund; and
• failed to provide adequate oversight of WIM's relationship with Link Fund Solutions, the fund’s authorised corporate director, including failure to respond appropriately after the company raised concerns regarding the fund’s liquidity position.

The FCA has also prohibited Mr Woodford from holding any senior manager roles and managing funds for retail investors. Mr Woodford and WIL have both referred their Decision Notices to the Upper Tribunal.

17. FCA fines and bans Markos Markou for a failure to act with integrity

On 29 July 2025, the FCA published its final notice (dated 10 July 2025) fining Mr Markos Theodosi Markou £10,000 and prohibiting him from performing any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional firm. 

Mr Markous performed the roles of Senior Manager Function 1 (Director) and 3 (Chief Executive) at Financial Solutions (Euro) Ltd (FSE). The FCA found that between November 2015 and October 2017, Mr Markou did not have appropriate oversight of FSE's mortgage business and failed to ensure the firm did not carry out such business whilst it did not have profession indemnity insurance. The FCA found that this amounted to a failure to comply with Statement of Principle 1 (Integrity).

Financial Crime

18.  UK government publishes updated guidance on exemptions from the money laundering obligations

On 31 July 2025, the Home Office published updated guidance on the following exemptions from money laundering obligations and money laundering reporting obligations: 

• Operating an account exemption: introduced by the Serious Organised Crime and Police Act 2005. The Proceeds of Crime (Money Laundering) (Threshold Amount) (Amendment) Order 2025 increased the threshold amount for carrying out a transaction under this exemption from £1000 to £3000, effective from 31 July 2025; 
• Paying away exemption: introduced by the Economic Crime and Corporate Transparency  Act 2023 (ECCT), for the purposes of paying away property below the threshold at the end of a customer relationship. The Proceeds of Crime (Money Laundering) (Threshold Amount) (Amendment) Order 2025 increased the threshold amount for carrying out a transaction under this exemption from £1000 to £3000, effective from 31 July 2025;
• Mixed property exemption: introduced by the ECCT, enabling businesses to allow customers proportionate access to the non-suspicious proportion of their assets; and
• Reporting exemptions: introduced by ECCT, creating a new reporting exemption under section 330 of Proceeds of Crime Act 2002, where the information about suspected money laundering only came to light as a result of a "status check" or "immigration check" conducted in compliance with the Immigration Act 2014.

Retail Services

19.  FCA publishes letter to CMCs on financial promotions and motor finance claims

On 4 August 2025, the FCA published a letter to Claims Management Companies (CMCs) requesting those firms to review their financial promotions in the context of motor finance claims to ensure compliance with the relevant FCA Handbook rules and alignment with the Consumer Duty standards. 

The FCA noted that it identified financial promotions across various media platforms that may breach the requirements set out in the Claims Management: Conduct of Business sourcebook and the Consumer Duty. The regulator is concerned about promotions that exaggerate potential claim values, falsely imply that refunds have already been secured or are guaranteed, and sign-up consumers without consent, among other issues. 

As a result, it expects CMCs to avoid relying on clickbait-style promotions or language that proposes a guaranteed outcome before an investigation takes place. Firms should also take care not to use language that implies a false sense of urgency, as this may place undue pressure on consumers and may be seen as "misleading" as per the FCA's rules and the Consumer Duty. Overall, firms must ensure that their financial promotions are clear, fair, and not misleading, and that they accurately reflect the nature and status of any potential claims. 

The FCA noted that it will proactively monitor the market to assess compliance.

20.  FCA to consult on Motor Finance Consumer Redress Scheme following Supreme Court ruling

On 3 August 2025, the FCA published a statement announcing its intention to consult on the establishment of a redress scheme to compensate motor finance customers. This announcement follows the Supreme Court's decision in Johnson v FirstRand Bank Ltd (London Branch) (t/a MotoNovo Finance) [2025] UKSC 33.

Key points highlighted by the FCA include:

• scope of redress scheme: The scheme will cover discretionary commission arrangements, and the FCA will seek views on which non-discretionary commission arrangements should be included within the scheme. It is expected to cover agreements dating back to 2007; 
• what will be compensated: the availability of redress will depend on whether certain key factors relating to commission were disclosed. These include: (i) the size of the commission relative to the credit charge, (ii) the nature of the commission (such as whether it was discretionary), (iii) the characteristics of the consumer, (iv) compliance with regulatory requirements, and (v) how and to what extent disclosure was made;
• redress calculation and interest: the consultation will explore possible methodologies for calculating compensation, including whether a minimum threshold should apply for eligibility. The FCA proposes an interest rate for compensation payments based on the average base rate plus 1% per annum; and
• opt-in/opt-out mechanisms: the FCA will consider the pros and cons of the opt-in versus opt-out participation in the redress scheme.

The FCA intends to publish the consultation paper by early October 2025, with a six-week consultation period. Should the redress scheme proceed, the FCA aims to implement the scheme and commence compensation payments to affected consumers in 2026.

The FCA will also review whether to extend the current 4 December 2025 deadline for firms to provide a final response to the relevant motor finance complaints.

21.  Supreme Court hands down judgment in motor finance case

On 1 August 2025, the Supreme Court (SC) handed down its judgment in Hopcraft and another v Close Brothers Ltd; Johnson v FirstRand Bank Ltd (London Branch) t/a MotoNovo Finance; Wrench v FirstRand Bank Ltd (London Branch) t/a MotoNovo Finance [2025] UKSC 33 . The SC allowed the appeals by the lenders, overturning the findings of the Court of Appeal.

In particular, the SC found that:

• In all cases, the dealers did not owe fiduciary duties or disinterested duties to the customers, and therefore the lenders could also not be held liable as accessories for breach of fiduciary duty (given that no such duty existed). The SC emphasised that:
  • the status of dealer as seller in an arm's length commercial transaction was incompatible with recognising undivided loyalty to the customer;
  • the existence of trust and confidence between parties (i.e. in the customer trusting the dealer's advice) is not of itself sufficient to create fiduciary duties; and
  • at no time in the negotiations did the dealer give any kind of assurance that in finding a suitable credit deal, it was putting aside its own commercial interest as seller.
• There was no claim of bribery, as such a claim would depend on the recipient of the bribe owing a fiduciary duty.

The claimant in Johnson (who had entered into a non-discretionary commission arrangement) succeeded in their claim under s140A of the Consumer Credit Act 1974 (CCA) (which deals with unfair relationships). The SC found that the relationship was 'unfair' under s140A-B of the CCA. This was because of:

• the size of the commission (which was 55% of the total charge for credit);
• the failure to disclose, which was a breach of CONC 4.5.3R; and
• the concealment of the 'commercial tie' between the lender and the dealer (the lender having right of refusal over the dealer's business).

In this case, the SC ordered the lender to repay the commission with interest.

In response to the Supreme Court's decision, the Financial Ombudsman published an update to its webpage 'Complaints about car finance commission' noting that it is considering the impact of the judgment on its process in relation to complaints relating to motor finance. 

Digital Finance and Fintech

22.  FCA announces decision to provide retail access to crypto exchange traded notes 

On 1 August 2025, the FCA published a press release announcing  retail consumers will be permitted to access crypto exchange traded notes (ETNs) traded on FCA-approved UK recognised investment exchanges (RIEs). This follows from the FCA’s quarterly consultation paper No. 48 (CP 25/16), published in June 2025, which proposed lifting the existing ban.  

The new rules, set out in the Conduct of Business (Cryptoasset Products) Instrument 2025, will be effective from 8 October 2025 and allow the sale, distribution, and marketing of ETNs to retail clients where these products are admitted to trading on a UK RIE. The changes also categorise UK RIE ETNs as Restricted Mass Marketing Investments and will apply marketing restrictions, including mandatory risk warnings and appropriateness assessments. 

Firms offering ETNs to retail clients must comply with the Consumer Duty, including requirements to specify a target market, ensure product design meets the needs of that market, and take reasonable steps to ensure distribution is limited to the identified target market. The FCA confirmed that the Financial Services Compensation Scheme will not cover these products.

Payments

23.  FCA publishes policy statement setting out changes to payments and e-money safeguarding regime

On 7 August 2025, the FCA published a policy statement (PS25/12) setting out changes to the safeguarding regime for e-money institutions and payment institutions (together, Payments Firms). The FCA also published its intended amendments to its guidance document, "Payment Services and Electronic Money – Our Approach" (the Approach Document). 

The policy statement follows the September 2024 consultation (CP24/20) (please see our briefing here), in which the FCA proposed two phases of safeguarding reforms (an interim regime and an end state regime). PS25/12 confirms (i) the introduction of the interim regime (now called the "supplementary regime") largely as proposed, and (ii) deferral of the end-state proposals (now called the "post-repeal regime") to allow the FCA to review implementation of the supplementary regime and determine if further changes are required.

Key changes introduced by the supplementary regime include:

• Enhanced reconciliation requirements: Payments Firms are now required to perform both internal and external safeguarding reconciliations at least once per day, excluding weekends, UK bank holidays and days where relevant foreign markets are closed;
• Resolution packs: Payments Firms must maintain a resolution pack, including information on where relevant funds are held, agents and distributors, and procedures for managing, recording and transferring relevant funds and assets;
• Notification requirements: Payments Firms are required to notify the FCA without delay of certain matters, including material failures relating to internal records, reconciliations and discrepancies;
• Safeguarding audits: certain Payments Firms must arrange an annual safeguarding audit by a qualified independent auditor (Payments Firms which have not been required to safeguard more than £100,000 of relevant funds in the previous 53 weeks are exempt);
• Safeguarding reporting: Payments Firms must submit a new monthly regulatory return to the FCA relating to their safeguarding arrangements;
• Internal governance: Payments Firms must allocate to a director or senior manager responsibility for (i) oversight of the Payments Firm's compliance with safeguarding requirements, (ii) reporting on such oversight to the Payments Firm's governing body;
• Third party due diligence: Payments Firms must carry out due diligence when appointing or periodically reviewing third parties involved in safeguarding arrangements. As part of this due diligence, Payments Firms must consider the need for diversification of third parties and make changes where appropriate; and
• Insurance/guarantee arrangements: additional requirements apply to Payments Firms using insurance or comparable guarantees to safeguard relevant funds, including ensuring policies do not have payout restrictions and having in place contingency plans at least three months before expiry of an insurance policy or comparable guarantee.

The supplementary regime, and related amendments to the FCA's Approach Document, will take effect from 7 May 2026.

Ashurst will be publishing a more detailed update on these developments in the coming days.

ESG

24.  FCA publishes findings of its multi-firm review into firms' climate reporting 

On 6 August 2025, the FCA published its findings from a multi-firm review on firms' (including asset managers and pension providers) climate reporting, further to the FCA's finalised rules (published in PS21/24) on climate disclosures based on the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations.

The review found that these rules have increased firms' consideration of climate risks and improved transparency for clients and consumers. However, the FCA notes that firms encountered some challenges with respect to limited data availability and the fact that some information was regarded as too complex for retail investors to engage with. The latter led to limited response from such investors on firms' TCFD reports, particularly at product level.

In response, the FCA plans on streamlining and enhancing its sustainability reporting framework. Specifically, it aims to simplify requirements and ease unnecessary burdens on firms, maintain good outcomes for clients, and promote international alignment and help the UK maintain its position as a global leader in sustainable finance.

25.  EU Commission publishes a recommendation on a voluntary sustainability reporting standard for small and medium-sized undertakings

On 30 July 2025, the EU Commission adopted a recommendation in relation to voluntary sustainability reporting standard for small and medium-sized enterprises (SMEs). This standard, developed by the European Financial Reporting Advisory Group (EFRAG), is intended to reduce administrative burdens for SMEs and facilitate their responses to requests for sustainability information from large companies and financial institutions subject to the Corporate Sustainability Reporting Directive (CSRD). The EU Commission has encouraged large undertakings to use this voluntary standard as the basis for their sustainability information requests to SMEs.

The EFRAG has announced it will mark the launch of the standard and discuss next steps at a public event in September 2025. A delegated act to formalise the standard is expected, subject to ongoing legislative negotiations.

26. EU Commission publishes delegated regulations supplementing the EU Green Bonds Regulation

On 25 July 2025, the EU Commission published three delegated regulations supplementing Regulation (EU) 2023/2631 on European Green Bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds (EU Green Bonds Regulation), including:

• Commission Delegated Regulation (EU) 2025/753 on the content, methodologies, and presentation of the information to be voluntarily disclosed by issuers of bonds marketed as environmentally sustainable or of sustainability-linked bonds in the templates for periodic post-issuance disclosures; 
• Commission Delegated Regulation (EU) 2025/754, on procedures for the exercise of the power to impose fines or periodic penalty payments by the ESMA on external reviewers; and
• Commission Delegated Regulation (EU) 2025/755, on fees to be charged by ESMA to external reviewers of European Green Bonds, the matters in respect of which fees are due, the amount of the fees, and the manner in which those fees are to be paid. 

On the same day, the EU Commission also published a communication establishing guidelines for pre-issuance disclosure templates for issuers of environmentally sustainable / sustainability-linked bonds. Issuers who resort to the voluntary templates for pre-issuance disclosure should publish these disclosures on their website. The same should be available, free of charge, until at least 12 months after the maturity of the bonds.

Other

27. ESAs publish Q&As on DORA

On 25 July 2025, the Joint European Supervisory Authorities (EBA, EIOPA and ESMA) (together, the ESAs) published key clarifications on DORA in a series of Q&As, confirming the following:

• scope of Register of Information for ICT contractual arrangements: the scope of registers of information regarding contractual arrangements for the use of ICT services should cover all financial entities and their branches within a consolidated group;
• inclusion of non-financial entities: While the main focus of registers of information is on financial entities and ICT intra-group service providers, it should also capture non-financial entities relevant to the provision of ICT services (e.g. intra-group service providers) as well as non-financial entities that have signed contractual arrangements for the provision of ICT services on behalf of a financial entity in the group; and
• separated and dedicated networks: DORA’s requirements for separated and dedicated networks for ICT asset administration are principle-based and technology-agnostic. Institutions can use logical (such as VLANs), physical, or hybrid network separation, provided these controls ensure effective isolation and are supported by a risk assessment. Additional controls may be needed when relying on logical segregation to meet network security standards.

28. FCA publishes findings in relation to digital design in customers' online journeys

On 31 July 2025, the FCA published findings from its review of consumer credit providers' use of digital channels to acquire customers and the design of their apps and websites. This follows the research conducted by the FCA on digital design and sludge practices. The latest review aimed to evaluate how firms using apps and digital platforms are delivering good customers outcomes in line with the Consumer Duty.

The FCA identified areas of good practice including, for example: (i) designing digital journeys to meet the needs of different customer groups identified within the firm's target market; (ii) ensuring that adequate levels of support are provided to customers; and (iii) using appropriate language and imagery to aid customers' understanding of products and features. 

Meanwhile, areas for poor practice requiring improvement included: (i) failing to support customers with vulnerable characteristics; (ii) lack of friction; and (iii) insufficient key information about products, such as fees and charges. 

Whilst findings of the review relate to consumer credit providers, the FCA highlighted that some of the good and poor practices identified may be of interest to any firm with a digital presence.

29. FCA publishes multi-firm review into off-channel communications

On 7 August 2025, the FCA published the findings of its multi-firm review into off-channel communications – those occurring outside approved, monitored channels. Firms must record and monitor communications related to regulated activities and take reasonable steps to prevent unrecorded channels. Robust recordkeeping and monitoring are highlighted as essential for detecting misconduct and protecting firms in client disputes.

The review assessed eleven wholesale banks, focusing on policy enhancements and management information used for compliance. While all firms had made improvements, the FCA found that breaches of internal policies persist across all staff levels, with 41% involving directors or above. The FCA stresses that ongoing breaches underscore the need for continued behavioural improvements, not just enhanced detection of off-channel communications.

The FCA suggests that firms consider whether: (i) employees fully understand their responsibilities with respect to recording communications; (ii) the firm's leadership sets a "tone from the top" and "speak up" culture; (iii) the firm effectively monitors third party vendors; (iv) UK senior managers have sufficient oversight of any global policies; and (v) management information is sufficient to oversee and assess effectiveness of surveillance and compliance.

Authors: Penny Chamberlain, Junior Associate; Tiegan Cormie, Junior Associate; Roni Fass, Junior Associate; Anjali Naik, Legal Apprentice