Financial Services SpeedRead: 31 July 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. HM Treasury publishes regulations relating to the equivalence of Swiss regulations on OTC Derivatives and CCPs

On 21 July 2025, HM Treasury published the OTC Derivatives Risk Mitigation and Central Counterparties (Equivalence) (Switzerland) Regulations 2025 (the Regulations). The Regulations were published alongside an explanatory memorandum. The Regulations set out HM Treasury's determinations under the equivalence framework set out in UK EMIR, that Switzerland's regulatory and supervisory regimes for risk mitigation for over-the-counter derivative contracts; and for central counterparties are equivalent to that of the UK. The Regulations will come into force on 1 January 2026.

2. BoE publishes consultation paper on regulatory framework for Central Counterparties

On 18 July 2025, the Bank of England published a consultation paper on proposals to restate and update CCP requirements under UK EMIR.

The current regulatory approach will be largely retained as is, but the consultation outlines targeted policy changes around margin transparency, client position porting, default waterfall enhancements, change in control processes, liquidity risk controls, supervisory procedures, and interoperability approvals.

The consultation closes on 18 November 2025, with final rules expected after mid-2026 and a six-month implementation period for CCPs.

3. FCA publishes Primary Market Bulletin 56

On 17 July 2025, the FCA published Primary Market Bulletin 56. The newsletter covers the following, among other things:

• Use of data and technology for oversight of UK MAR compliance: The FCA highlights its focus on investing in technology and refining its use of data from market participants to identify failures in compliance with reporting obligations under UK MAR. To support this objective, the FCA has created a new Market Oversight Data & Intelligence department, tasked with monitoring compliance in relation to such obligations through a data-led approach;
• Expiry of Transitional Provisions (TPs) under the UK Listing Rules (UKLRs): Following the entry into force of the UKLRs on 29 July 2024, the FCA has written to shell companies in scope of the rules to remind them of actions that they may need to undertake before the upcoming expiry of the transitional provisions on 29 July 2025;
• Issuer contact details: The FCA also reminds listed firms to ensure the FCA has up-to-date contact details of relevant individuals (including of certain applicants, issuers, key persons and nominated persons for the service of documents); and
• Enhancing the National Storage Mechanism: Finally, the FCA has launched a survey to assess users' current experience of the National Storage Mechanism, to identify potential improvements.

4. HM Treasury publishes policy paper on UK Wholesale Financial Markets Digital Strategy

On 15 July 2025, HM Treasury published a policy paper on the Wholesale Financial Markets Digital Strategy, setting out the UK Government's plan to modernise and digitalise the UK's wholesale financial markets. The Strategy is structured around three main pillars: (i) Market optimisation; (ii) Market Transformation; and (iii) Market Leadership.

At a high-level, these encompass:

• Market optimisation: a focus on automation and use of smart data to reduce manual intervention, lower costs, and improve efficiency across wholesale markets. The adoption of smart data principles is also a priority – the Government is seeking to work with the sector and regulators to identify initiatives to enhance data sharing across wholesale markets. The Government also seeks to remove paper-based processes which create unnecessary costs and frictions. This is already being undertaken by the UK Digitisation Taskforce through its focus on removing paper share certificates. The Government further commits to working with industry to identify additional processes to be de-materialised across other asset classes such as bonds;
• Market transformation: the UK seeks to take the lead in realising the benefits of technologies such as DLT, AI, and quantum computing. The Government commits to enabling the sector to test and scale solutions that tokenise financial assets and supporting the digitalisation of post-trade processes. Regulatory sandboxes, such as the Digital Securities Sandbox, will facilitate the development and implementation of new digital infrastructures; and
• Market leadership: a new Digital Markets Champion will be appointed to coordinate industry efforts and ensure alignment with international digitalisation initiatives. The Government will work with regulators and industry stakeholders to address regulatory barriers and adopt a globally consistent approach to digital markets, joining up work in the UK sector with other jurisdictions.

5. FCA publishes policy statements in relation to new Public Offers and Admissions to Trading regime

On 15 July 2025, the FCA published a policy statement (PS25/9) setting out the final rules to implement the new Public Offers and Admissions to Trading Regulations 2024 (POATR), which will replace the UK Prospectus Regulation (UKPR). The new rules encompass the FCA's new 'Prospectus Rules: Admissions to Trading on a Regulated Market (PRM) sourcebook' as well as amendments to the Market Conduct sourcebook for multilateral trading facilities operating primary markets. Some amendments to the UK Listing Rules will also be made as a result of all of these changes. For further detail, please see other Ashurst briefings with regards to the impact on equity securities (here) and non-equity securities (here).

Alongside the rules for the broader POATR framework, the FCA also published a policy statement (PS25/10) setting out the final rules for the new public offer platform (POP) regime. Through the new regulated activity of operating an electronic platform for public offers of relevant securities (i.e. operating a POP), companies will not need to produce a prospectus for securities offered that will not be admitted to a public market. Under the current UKPR, a prospectus would generally need to be published for public offers of securities over €8m. Instead, off market public offers of €5m or more which are directed at a wide range of investors must be made via a POP, while offers below this amount will still be exempt under the POATRs.

The new rules for the POATR framework and POP regime ultimately aim to make it easier for companies to raise capital in the UK and reduce costs.

The FCA expects the new rules to come into effect on 19 January 2026.

6. HM Treasury publishes policy note and draft regulations on CCPs and the UK EMIR framework

On 15 July 2025, HM Treasury, published a policy note on updating the UK's regulatory framework for Central Counterparties along with a draft of the Central Counterparties (Amendment) Regulations 2025 (CCP Regulations).

The draft CCP Regulations are intended to accompany future legislation revoking the CCP provisions in UK EMIR, by restating certain elements of the UK EMIR Framework that cannot be replaced by Bank of England rules.

The BoE will consult on its new CCP rulebook on 18 July 2025, comments on the draft statutory instruments are invited until 18 November 2025. HM Treasury plans to lay the final legislation before Parliament in 2026.

Banking and Prudential

7. European Commission consults on communication on guidance concerning the treatment of equity exposures incurred under legislative programmes under EU CRR

On 22 July 2025, the European Commission published a targeted consultation document on a draft communication on guidance concerning the treatment of equity exposures incurred under legislative programmes pursuant to Article 133(5) of Regulation (EU) No 575/2013 (EU CRR).

Since 1 January 2025, Article 133(5) of the EU CRR (as amended) allows a favourable prudential treatment for equity exposures incurred under legislative programmes.

The objective of the communication is to provide guidance on the notion of legislative programmes and on the conditions with which such programmes must comply for the purposes of Article 133(5). In addition, the communication sets out the approach that competent authorities should adopt to monitoring equity exposures benefitting from the treatment under Article 133(5) to ensure they do not exceed 10% of the institutions' own funds.

The Commission also indicated an intention to establish a public register of legislative programmes that satisfy the eligibility conditions set by Article 133(5).

The consultation will close on 8 September 2025 and the Commission expects to publish the final version of the communication in Q4 2025.

8. PRA publishes policy statement on Fundamental Rules for FMIs

On 18 July 2025, the PRA published a policy statement setting out its Fundamental Rules for Financial Market Infrastructures (FMIs), following its consultation paper published on 19 November 2024 (see our previous SpeedRead entry on the consultation here).

The Fundamental Rules are 10 rules setting out high-level outcomes expected from FMIs including in relation to risk management, financial stability, and operational resilience. The rules are applicable to UK recognised central counterparties, central securities depositories, payment system operators and specified service providers, and are intended to enhance the transparency and effectiveness of the PRA's supervisory approach.

The rules will take effect from 18 July 2026 and are now incorporated into the PRA’s FMI Rulebook.

9. PRA publishes a policy statement on the restatement of UK CRR and Solvency II requirements

On 17 July 2025, the PRA published a policy statement (PS12/25) on the restatement of various provisions of the UK CRR in the PRA Rulebook. This follows on from the feedback received to the 2024 consultation paper (CP8/24) and to parts of chapters 3 and 7 of its October 2024 consultation paper (CP13/24).

This policy statement covers the PRA's final policy with respect to the definition of capital, external credit assessment institutions (ECAI) mapping, and securitisation supervisory expectations.

The final rules and policy material of this policy statement will come into force on 1 January 2026. The remaining proposals consulted on in CP13/24 are dependent on the finalisation of the Basel 3.1 rules and will be covered by a subsequent policy statement.

10. PRA publishes the first policy statement on amendments to the large exposures framework

On 17 July 2025, the PRA published its first policy statement (PS14/25) on amendments to the large exposures framework. This follows on from the consultation paper (CP14/24) published in October 2024 and the proposals relating to groups of connected clients in chapter 4 of CP23/23.

In this policy statement, the PRA has made amendments to the Large Exposures (CRR) Part and Large Exposures Part of the PRA Rulebook, as well as the instructions for reporting on large exposures and concentration risk. The new supervisory statement (SS3/25) – Identification of groups of connected clients for large exposures purposes – is also introduced.

The amended large exposures rules and accompanying policy material come into force on 1 January 2026.

The remaining proposals in CP14/24 will be finalised in 2026. The PRA also expects to finalise its policy on shadow banking entities (set out in chapter 3 of CP23/23) in due course.

11. PRA publishes policy statement on implementing the Bank Resolution (Recapitalisation) Act 2025

On 16 July 2025, the PRA published a policy statement (PS13/25) which sets out the changes that will be made to the PRA Rulebook with respect to the implementation of the Bank Resolution (Recapitalisation) Act 2025. This follows on from the feedback received to a previous consultation paper (CP4/25).

The Bank Resolution (Recapitalisation) Act 2025 (Commencement) Regulations 2025 were also published and brought sections 1 – 7 of the Act into force on 16 July 2025.

The Act allows for the recapitalisation of a failing bank with the necessary funds being provided by the FSCS and then recouped via a levy on the industry. This is a new option to support the continuity of banking services in failure by allowing for the recapitalisation of a failing firm. This would support the sale of all, or part, of the firm to a private sector purchaser or a transfer to a bridge bank.

The policy statement will amend the Depositor Protection Part of the PRA Rulebook to ensure the FSCS has the necessary powers to fulfil its new functions under the Act.

Amendments to supervisory statement SS18/15 and the statement of policy (SoP) – 'Deposit Guarantee Scheme' will be introduced on publication of the policy statement relating to the proposed changes to depositor protection limits in CP4/25.

12. PRA consults on adjustments to the market risk framework under Basel 3.1

On 15 July 2025, the PRA published a consultation paper (CP17/25) on the adjustments to the market risk framework, which is also known as the Fundamental Review of the Trading Book (FRTB).

As part of the UK's implementation of the Basel 3.1 framework, the near-final rules have already been published in two policy statements (PS17/23 and PS9/24) in December 2023 and September 2024, respectively.

However, in view of the uncertainty in other jurisdictions' approach to implementation, the PRA is consulting on the following proposals:

• delaying the new internal model approach (i.e. the FRTB-IMA) by one year to 1 January 2028. Firms would be able to continue to use existing market risk models in the interim period, or switch to the new standardised approaches;
• implementing operational simplifications for the treatment of collective investment undertakings in the trading book boundary and the Advanced Standardised Approach (ASA);
• introducing a permissions regime to support the proportionate capitalisation of residual risks in the ASA; and
• updating reporting and disclosure obligations to align with the above proposals.

The consultation closes to comments on 5 September 2025.

The timing of when different prudential regimes would come into force is summarised as follows:

• the new internal model approach for market risk as 1 January 2028;
• all other aspects of Basel 3.1 implementation to proceed on 1 January 2027 (this has already been delayed); and
• the Strong and Simple regime to proceed on 1 January 2027 (this also means that the Interim Capital Regime is no longer required given the effective date is aligned with the Basel 3.1 implementation).

13. PRA consults on amendments related to MREL and the Resolution Assessment threshold

On 15 July 2025, the Bank of England (BoE) announced a package of measures designed to maintain stability in the financial sector while offering new growth opportunities for mid-sized banks and building societies.

Specifically, the following publications have been released in relation to the minimum requirement for own funds and eligible liabilities (MREL) and bank resolution:

• the PRA published a consultation paper (CP14/25) on amendments to the resolution assessment threshold and the review frequency of recovery plans. The key proposals include:
  • increasing the threshold at which firms come into scope of the Resolution Assessment Part of the PRA Rulebook on reporting and disclosure from £50 billion to £100 billion in retail deposits; and
  • reducing the frequency at which Small Domestic Deposit Takers (SDDTs) and SDDT consolidation entities need to review their recovery plans from at least annually to at least every two years.
• the PRA published a consultation paper (CP15/25) on targeted amendments to MREL reporting templates. This paper should be read together with the BoE's policy statement on the amendments to its approach to setting a minimum MREL, and the revised version of the related Statement of Policy which will come into force on 1 January 2026 (see further information below).
• the PRA published a consultation paper (CP16/25) on disclosure, resolvability resources, capital distribution constraints and the basis for Pillar 3 disclosure.

The above consultations will close to comments on 31 October 2025.

On 15 July 2025, the BoE also published the following documents and statements:

• a policy statement regarding the amendments to the Statement of Policy on setting the MREL. This follows on from the feedback received to the October 2024 consultation. The revised final policy is intended to ensure BoE's approach to setting preferred resolution strategies and MREL is more robust and proportionate.
  
  Notably, the approach to indexing the indicative total assets thresholds has been amended by increasing the indicative threshold range to £25 - £40 billion from January 2026. This will be updated for the impact of nominal economic growth every three years.
  
  The changes in this policy statement are reflected and supplemented by the PRA consultation papers described above, relating to MREL reporting and disclosure requirements.

• a revised version of the Statement of Policy regarding the BoE's approach to setting an MREL.
• a statement on maintaining a fit for purpose resolution regime, summarising the updates the BoE and the PRA are making (or proposing to make) with regard to the resolution regime.

14. HM Treasury updates Code of Practice for Special Resolution Regime under the Banking Act 2009

On 15 July 2025, HM Treasury published a revised version of the Code of Practice for the Special Resolution Regime under the Banking Act 2009.

This version reflects the following updates:

• changes to the relevant legislation which removed FCA solo-regulated investment firms from the UK resolution regime;
• removal of sections related to the resolution regime for central counterparties, following the enactment of the Financial Services and Markets Act 2023; and
• the enactment of the Bank Resolution (Recapitalisation) Act 2025 which introduced a new source of funding in certain resolution scenarios.

15. HM Treasury updates policy paper on approach to applying FSMA model of regulation to the UK CRR

On 15 July 2025, HM Treasury published a policy update with respect to the application of the Financial Services and Markets Act 2000 (FSMA) model of regulation to the UK Capital Requirements Regulation (UK CRR).

This follows on from the policy statement published in September 2024, setting out HM Treasury's intention to apply the regulatory approach under FSMA to implement the Basel 3.1 standards, as well as its plans to revoke the remaining parts of the UK CRR.

In this policy update, HM Treasury explains the steps that it will take to further progress this work, including proposals relating to Basel 3.1 implementation, the overseas recognition regimes, and the retention of UK CRR definitions in legislation. To this end, the policy update is accompanied by:

• draft transitional regulations that will require institutions to apply specified PRA rules for the calculation of their market risk capital requirements until the end of the transitional period of 31 December 2027; and
• draft regulations that will restate relevant definitions in UK legislation.

These proposals and draft legislation should be read alongside the PRA’s consultation paper published on the same day.

HM Treasury is also legislating to bring into force the revocation of parts of the UK CRR relating to definition of capital and total loss-absorbing capacity (TLAC) with effect from 1 January 2026.

16. FCA publishes explanatory statement on the derivatives trading obligation under UK MiFIR

On 17 July 2025, the FCA published an explanatory statement under Article 28a(9) of UK MiFIR, further to a direction issued by the FCA on 31 December 2024 to modify the UK derivatives trading obligation (DTO). The direction allowed firms subject to the UK DTO, trading with or on behalf of EU clients (also subject to the EU DTO), to execute those trades on EU trading venues provided certain conditions are met.

The FCA's statement was made on the basis that under Article 28a(9), where a direction remains in effect for longer than six months, the FCA must publish an explanation “as soon as reasonably practicable” as to why the conditions under Article 28a(1)(a), the ongoing need to prevent or mitigate market disruption, and Article 28a(1)(b), the advancement of the FCA's operational objectives, continue to be met to extend it for a further six months.

The FCA has confirmed the direction remains in effect for the six-month period ending 31 December 2025.

17. EBA publishes report on direct provision of banking services from third countries under CRD VI

On 23 July 2025, the EBA published a report on the potential for the direct provision of core banking services from third countries, without the need for a branch in the EU. Article 21c of the Capital Requirement Directive VI (CRD VI) establishes the general prohibition on the direct provision of core banking services by third country undertakings to counterparties in the EU, with some exemptions and carve outs (such as the inter-bank or intra-group exemptions, and reverse solicitation). In sum, the report confirms that Article 21c is not being amended.

The EBA had been mandated under Article 21c(6) to assess in consultation with other European Supervisory Authorities whether it is appropriate to extend the possibility for third country undertakings to provide core banking services directly to any EU financial sector entity, having regard to financial stability and competitiveness in the EU. The EBA did not find sufficient evidence to warrant such amendment, noting that existing exemptions and carve-outs are adequate and provide flexibility. However, the EBA has suggested clarifying the interaction of Article 21c with UCITS and AIFMD, via the EBA Q&A tool

Fund Management

No new entries.

Senior Managers and Governance

18. FCA and PRA consult on changes to the Senior Managers & Certification Regime

On 15 July 2025, the FCA and PRA published consultation papers (see here and here respectively) containing proposals to streamline the Senior Managers & Certification Regime (SMCR). The proposed changes include the removal of the Certification Regime and increased flexibility for the regulators to reduce the number of senior management functions which require pre-approval. The FCA and PRA intend to make the regime less onerous on firms, whilst continuing to protect the safety and soundness of firms as well as protecting consumers and markets.

Further proposals include, without limitation:

• providing firms with more time and flexibility to submit applications for approving new senior managers where unexpected or temporary changes occur;
• stripping out duplication where the same individuals are certified for separate functions;
• providing guidance to firms on streamlining the annual checks firms need to undertake for fitness and propriety assessments; and
• increasing the validity period for criminal record checks for senior manager applications;

The consultation will close on 7 October 2025. In Phase 2, the FCA and PRA will work with HM Treasury as it consults on legislative changes to make additional changes to the regime.

Financial Crime

19. HM Treasury publishes response to Money Laundering Regulations consultation

On 17 July 2025, HM Treasury published a response to its 2024 consultation on improving the effectiveness of the UK's Money Laundering Regulations (MLRs). The response, which reflects feedback from a wide range of stakeholders, sets out upcoming changes to the MLRs that aim to close loopholes, clarify requirements to become more effective, and guarantee that customer due diligence is targeted at high-risk activity.

The following are some of the key changes that HM Treasury proposes to make to the MLRs:

• enhanced due diligence on complex transactions and high-risk third countries;
• due diligence on pooled client accounts and due diligence triggers for certain non-financial firms;
• onboarding of customers in bank insolvency scenarios;
• information sharing between supervisors and other public bodies, and supervisor co-operation with Companies House; and
• registration and change in control for cryptoasset service providers (CASPs).

The government aims to publish a draft statutory instrument for technical feedback in the coming months, before laying in front of Parliament at the end of 2025 if parliamentary time allows. To note, multiple proposed changes to the regime may be brought about by non-legislative means, such as amendments to relevant guidance.

20. FCA amends finalised guidance on the treatment of politically exposed persons

On the 15 July 2025, the FCA published updated finalised guidance on the treatment of politically exposed persons (PEPs) for anti-money laundering purposes (FG 25/3). See our previous Financial Services Speedread covering FG25/3 here.

The update was to clarify that firms should not treat non-executive Board members of civil service departments in the UK as PEPs, unless they already meet this definition in another capacity.

21. FCA fines Barclays almost £42.5 million for poor handling of financial crime risks

On 14 July 2025, the FCA published the final notices issued to Barclays Bank UK PLC (here) and Barclays Bank Plc (here) in relation to Barclays' failings in financial crime risk management, with a combined penalty of almost £42.5 million.

Barclays Bank Plc received a penalty of £39,314,700 for serious anti-money laundering breaches connected to its relationship with Stunt & Co Ltd, a corporate customer involved in high-risk transactions with Fowler Oldfield. The FCA identified an insufficient onboarding process and lack of adequate monitoring. Despite there having been multiple red flags, including very substantial payments from Fowler Oldfield, adverse media, and law enforcement alerts, Barclays did not apply enhanced due diligence or update its risk assessments.

In addition, Barclays Bank UK PLC was fined £3,093,600 for systemic deficiencies in its customer due diligence and account opening procedures in relation to WealthTek LLP's client account. The FCA found that Barclays Bank UK PLC did not gather sufficient information to understand the money laundering risks.

Barclays has since cooperated fully with the FCA, self-reported its findings, and invested in a significant remediation programme to strengthen its AML controls. The FCA highlighted that banks need to take responsibility for financial crime systems and controls, and to act promptly particularly when risks are identified.

Retail Services

22. HM Treasury publishes policy note and draft statutory instrument on new specified activity for "targeted support"

On 15 July 2025, HM Treasury published a policy note and draft statutory instrument (see here) proposing amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) to introduce a new specified activity of providing targeted support. The FCA previously published a consultation paper (CP25/17) on proposals relating to targeted support for consumers' pensions and retail investment decisions on 30 June 2025 (see our detailed briefing on the CP here).

The draft statutory instrument states that providing targeted support involves making recommendations to individuals based on assessments of information about the individual, but is not tailored to the individual's specific circumstances. It further clarifies that such activity is separate to the activity of "advising on investments" under article 53 RAO. Firms will need to be regulated to provide targeted support and will be subject to bespoke conduct standards, distinct from those required for the provision of investment advice.

HM Treasury is seeking feedback on whether the new activity is sufficiently distinct from the existing regulated activity of investment advice. Feedback can be provided until 29 August 2025. Legislation is expected in late 2025, subject to the feedback on the draft statutory instrument.

23. FCA publishes policy statement on simplifying mortgage rules

On 22 July 2025, the FCA published a policy statement (PS25/11) on the simplification of its mortgage rules and how the FCA is increasing flexibility for both consumers and firms. This follows from its consultation on its ongoing Mortgage Rule Review published on 7 May 2025 (CP25/11). The FCA is proceeding with the rules and guidance largely as consulted on, with only minor changes to reflect feedback. For further details on the consultation, please see our previous Financial Services Speedread here.

The amended rules and guidance are set out in the Mortgage Rule Review (Execution-Only, Affordability and Expired Terms) Instrument 2025 (FCA 2025/34), and come into force immediately. Firms are permitted, but not required, to adopt the new rules which provide them with more flexibility.

To note, the FCA has also removed two pieces of non-Handbook guidance that are no longer necessary in light of the new rules: FG13/7 (Dealing fairly with interest-only mortgage customers who risk being unable to repay their loan); and FG24/2 (Guidance for firms supporting their existing mortgage borrowers impacted by the rising cost of living).

Digital Finance and Fintech

24. ESMA publishes final report on assessment criteria of knowledge and competence under MiCA

On 11 July 2025, ESMA published a final report setting out new guidelines for the criteria on the assessment of knowledge and competence under the Markets in Crypto Assets Regulation (MiCAR), following ESMA's consultation paper published in February 2025 (see our previous Financial Services SpeedRead entry on this here).

The final guidelines, developed under ESMA's mandate under Article 81(15) of MiCA, establish criteria for evaluating the qualifications and experience of staff at cryptoasset service providers (CASPs) who provide information or advice on cryptoassets and related services under MiCA.

The guidelines aim to enhance investor protection by ensuring CASPs staff possess appropriate expertise, and to assist competent authorities in assessing CASPs compliance. In particular, the guidelines:

• provide guidance on the level of knowledge required and competence expected of staff; and
• address specific features and risks, such as high market volatility and cyber security risks, through the criteria for the assessment of the relevant staff's knowledge and competence.

The guidelines are detailed in Annex III of the report and will be translated into all official EU languages and published on ESMA’s website. They will take effect six months after publication in January 2026.

25. ESMA publishes list of MiCA grandfathering periods across EU Member States

On 22 July 2025, ESMA published a list setting out the grandfathering periods (e.g. transitional periods for CASPs to operate under existing national legislation) for the implementation of MiCA across EU Member States. The periods range from 6 months (e.g. Netherlands) to 18 months (e.g. Luxembourg, Cyprus, Italy), with some Member States requiring CASPs to apply by a specific date to benefit from grandfathering.

ESMA notes that some Member States have communicated expected grandfathering periods, but some of these periods have not yet been incorporated into national law.

26. HM Treasury publishes Digital Gilt Instrument Pilot update

On 15 July 2025,  HM Treasury published an update on its Digital Gilt Instrument (DIGIT) Pilot (the Pilot). For more details on the background of the DIGIT Pilot, please see our previous Financial Services Speedread here, published following the announcement of the Pilot in March 2025.

HM Treasury has announced that it will now test some additional features as part of the Pilot. This follows feedback from the first stage of the procurement process, the Preliminary Market Engagement Notice (PMEN), which sought views from the financial services sector on the delivery of DIGIT. The new features being tested are (i) on-chain settlement, (ii) enabling settlement of over-the-counter trades, (iii) supporting interoperability and (iv) improving transparency into ownership of securities and other benefits.

The government intends to engage with "Digital Market Champions" to be recruited in Autumn; this role has been created under the new Wholesale Financial Markets Digital Strategy published on 15 July 2025 (please refer to entry 4 of this Financial Services Speedread). The government intends to appoint suppliers near the end of 2025.

27. ESMA publishes statement in relation to crypto-asset service providers offering unrelated products or services

On 11 July 2025, ESMA published a statement providing guidance to CASPs offering unregulated services on avoiding misperceptions.

In particular, the statement explains that where CASPs provide both regulated and unregulated products or services, clients may be at risk of misunderstanding the protections available to them. This is because unregulated products or services are not afforded the same protections as those regulated under MiCAR.

The guidance sets out a table of 'dos' and 'don’ts' that CASPs can consult to avoid the risk of misperceptions.

Payments

28. FCA publishes consultation paper on deferred payment credit (or BNPL)

On 18 July 2025, the FCA published a consultation paper (CP25/23) outlining its proposed regulatory approach for Deferred Payment Credit (DPC), commonly known as Buy Now Pay Later (BNPL). DPC refers to interest-free credit repayable in 12 or fewer instalments within 12 months, which is currently exempt from regulation. The new regime will bring DPC under FCA regulation from 15 July 2026 (Regulation Day).

Key proposals in CP25/23 include:

• Authorisation: third-party lenders offering DPC will require FCA authorisation or temporary permission to continue operating. Merchants offering their own DPC agreements directly will remain exempt;
• Information requirements: the FCA aims to ensure consumers receive clear, timely information about DPC products, including obligations, risks, and rights. Firms must provide key product information before agreements are entered into and ensure ongoing access to relevant information throughout the life of the agreement;
• Conduct standards: the FCA will apply its Consumer Duty and relevant sections of the Consumer Credit Sourcebook (CONC). DPC customers will now also have access to the FOS.
• Broking of DPC agreements falls outside the scope of the regulation;
• Assess creditworthiness: DPC lenders will now be required to apply the existing FCA rules (CONC 5.2A) to all DPC agreements, regardless of value; and
• Application of FCA sourcebooks: the Senior Managers and Certification Regime (SMCR) will apply to DPC firms, as well as other sourcebooks including PRIN, COND and SYSC.

DPC agreements provided by third-party lenders will not be regulated where they are entered into prior to Regulation Day, and the temporary permissions regime will allow firms to continue operating while seeking full authorisation.

The consultation is open until 26 September 2025, and the FCA intends to issue a policy statement in early 2026.

29. HM Treasury publishes an update on the Payments Vision Delivery Committee

On 15 July 2025, HM Treasury published an update on the UK’s Payments Vision Delivery. The update outlines the establishment of the Payments Vision Delivery Committee, which will set the strategic direction for retail payments and oversee the development of a new, collaborative model involving both public authorities and industry participants.

Key features include the creation of a Retail Payments Infrastructure Board, chaired by the Bank of England, and an industry-led Delivery Company responsible for procuring and funding new infrastructure. Pay.UK will continue to operate existing interbank payment systems, focusing on maintaining the resilience and functionality of such systems.

The Committee will publish its strategy for retail payments infrastructure in the autumn of 2025, followed by a Payments Forward Plan by year-end, setting out a sequenced programme of initiatives across the payments ecosystem. The new model aims to drive innovation, competition, and security, while supporting interoperability with emerging digital money forms and aligning with broader financial sector objectives.

30. UK government publishes statement on new approach to retail payments infrastructure

On 15 July 2025, the Bank of England published a statement on the new approach to retail payments infrastructure (an equivalent statement was published by HM Treasury). This statement has been developed by the Payments Vision Delivery Committee, which was established to enhance regulatory coordination and advance the implementation of key initiatives, including the introduction of the UK's retail payments infrastructure.

Key points in the statement include that Pay UK will retain its role as operator of existing interbank payment systems, industry experts will leads the procurement and delivery of new infrastructure, and the BoE will set up and chair a Retail Payments Infrastructure Board to lead the design of next-generation infrastructure.

The Payments Vision Delivery Committee intends to publish the strategy for retail payments infrastructure in Autumn. The Committee will also publish the Payments Forward Plan, which seeks to provide a plan of initiatives for the payments ecosystem, including for both retail and wholesale payments and the role of digital assets.

ESG

31. HM Treasury publishes UK Green Taxonomy consultation response

On 15 July 2025, HM Treasury published the Government's UK Green Taxonomy Consultation Response (the Response) as part of the Leeds Reform proposals. This represented the Government's follow up to the consultation in November 2024 which was launched to assess the value case for a UK Green Taxonomy (UK Taxonomy) and the ways in which it would be used by the market.

In the Response, the Government confirmed that it would not take forward proposals to establish a UK Taxonomy.

The feedback to the consultation had been mixed; 45% of respondents had expressed positive sentiment but 55% of respondents had a mixed or negative sentiment.

HM Treasury noted that having used consultation responses to inform an assessment against the two objectives of channelling capital and reducing greenwashing, the government does not consider there to be compelling evidence that a UK Taxonomy would deliver these objectives in a proportionate way. Whilst the government's ambitions to continue as a global leader remain unchanged, other policies (such as Sustainability Reporting Standards) were of higher priority to accelerate investment into the transition to net zero and limit greenwashing.

32. European Commission adopts Delegated Regulation amending the European Sustainability Reporting Standards

On 11 July 2025, the European Commission published a delegated regulation amending Commission Delegated Regulation (EU) 2023/2772 which sets out the European Sustainability Reporting Standards (ESRS) for sustainability reporting obligations under the Corporate Sustainability Reporting Directive.

These amendments were required as "wave one" companies (i.e. those subjected to sustainability reporting obligations for the 2024 financial year) were not captured by the "Stop-the-Clock" Directive 2025/794, which delayed by two years the sustainability reporting requirements for companies that report from financial year 2025 and 2026.

The amendments will allow "wave one" companies to continue to apply existing reliefs available in the ESRS with respect to sustainability reporting, for financial years 2025 and 2026. The EU Commission is carrying out a review of the ESRS, intending to reduce the number of data requirements and clarifying provisions deemed unclear and improving consistency with other legislation. The review is due to be completed by financial year 2027.

Other

33. FCA publishes Market Watch 82

On 23 July 2025, the FCA published Market Watch 82, setting out its recent observations on the UK MiFIR transaction reporting regime. The FCA expects firms to have in place processes for identifying, addressing and disclosing regulatory reporting issues in an accurate and timely manner. However, as explained in the Market Watch, the FCA has seen persistent inefficiencies in firms' transaction reporting framework. The feedback given covers the following areas:

• Remedial timelines: the FCA identified fragmented decision-making processes, inadequate resourcing, lack of root cause analysis, reactive cultures and weak governance as causes of delayed remediation;
• Back reporting: the FCA identified ineffective oversight, weak or lack of internal processes, inaccessible historic data, and de-prioritisation of BAU processes whilst carrying out large back reporting exercises, as causes of inaccurate and incomplete transaction reports; and
• Quality of breach notifications: the FCA sets out best practices on breach notifications, including providing detail on the issues, impacted transactions, root cause and remediation plan.

The FCA expects firms to consider integrating the feedback given into existing processes to ensure efficient transaction reporting.

34. HM Treasury publishes draft Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations

On 21 July 2025, HM Treasury published the draft version of the Financial Services and Markets Act (Mutual Recognition Agreement) (Switzerland) Regulations 2025 (the Switzerland Regulations), alongside an explanatory memorandum.

The Switzerland Regulations aim to implement the UK's commitments set out in the Berne Financial Services Agreement into UK legislation.

The Switzerland Regulations contain a range of provisions in this regard, including provisions to (i) provide the UK regulators with the tools enable them to fulfil their roles under the Berne Agreement; (ii) provide the FCA and PRA with powers to deploy against Swiss firms providing investment services under the new RAO exclusion (including a wind-down regime); and (iii) enable Swiss investment services firms to supply cross-border services to certain UK clients, including sophisticated high net worth investors.

35. ECB publishes guide for banks on outsourcing cloud services to cloud service providers

On 16 July 2025, the ECB published their final guide for banks on outsourcing cloud services to cloud service providers (the Guide).

The Guide was published further to the ECB's consideration of comments received further to the public consultation in June 2024. It does not create new rules but clarifies the ECB's interpretation of existing rules and provides good practice examples.

36. HM Treasury publishes guidance on overseas regulation regime

On 15 July 2025, HM Treasury published its guidance on Overseas Recognition Regimes (ORRs), together with the draft Financial Services (Overseas Recognition Regime Designations) Regulations 2025 (the ORR Regulations).

ORRs are legislative provisions permitting HM Treasury to recognise the regulatory framework of the financial services outside in countries outside of the UK. The guidance sets out HM Treasury's plan to use ORRS to replace the existing equivalence regime inherited from the EU.

The ORR Regulations pull together a comprehensive regime which incorporates the existing ORRs under the Short Selling Regulations 2025 and Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023 and the equivalence decisions that were inherited when the UK left the EU.

The ORR Regulations are intended to take effect on 28 November 2025.

37. HM Treasury publishes consultation paper on cross-cutting reforms to the regulatory framework

On 15 July 2025, HM Treasury published a Consultation Paper on cross-cutting reforms to the regulatory environment. These proposals build on the initiatives first set out in the Government's 'Regulation Action Plan', published in March of this year.

As part of these proposals, the Government plans to:

• introduce shorter statutory timeframes for regulators to determine key applications including authorisation applications, variations of permission, and senior management approvals;
• design simplified authorisation process for innovative start-ups. This tailored regime would enable eligible firms to engage in limited regulated activities under streamlined conditions. A formal consultation on this initiative is expected in autumn 2025;
• legislate to require the FCA and PRA to publish long-term strategies outlining how they plan to achieve their regulatory objectives, to provide greater clarity to stakeholders about the UK’s direction of travel for the financial sector;
• removing the obligation for regulators to consider each "have regard" in everyday decision-making. Instead, they would be required to have regard to the regulatory principles and remit letters when producing their new long-term strategies; and
• conduct a review of the overall reporting framework for the regulators to reduce duplication, ease administrative burdens, and enhance oversight.

Separately, the Government has asked the FCA to report by 30 September 2025 on its plans to address its concerns regarding the Consumer Duty for wholesale firms engaged in distribution chains which impact retail consumers, and to provide certainty on the categorisation of professional clients.

The consultation closes at midday on 9 September 2025.

38. UK Government and FCA consult on modernising the UK redress system

On 15 July 2025, the FCA and Financial Ombudsman Service (FOS) published a joint consultation paper (CP25/22) on modernising the redress system. HM Treasury separately published its own consultation paper on the same day, aligned with the FCA and FOS' proposals.

The proposals outlined in the consultations are designed to enhance clarity, consistency, and predictability in the redress process, ensuring that consumers receive appropriate outcomes when issues arise.

The consultation invites feedback on several key areas, including:

• Examples of good practice in identifying and managing redress issues, and clarification of the FCA's expectations for firms undertaking proactive redress initiatives;
• Updates to SUP 15 guidance to clarify when firms should report issues that may cause foreseeable harm or represent systemic risks to the FCA;
• A new registration phase for complaints and adjustments to the FOS's delegated authority in case determinations, to improve efficiency and consistency of resolutions;
• Criteria for mass redress events or to determine whether an issue has broader implications;
• Changes to DISP and COMP sourcebooks to boost operational efficiency of the FOS and the Financial Services Compensation Scheme (FSCS); and
• Stronger collaboration between the FCA and FOS, including a new lead complaint process and a referral mechanism to align regulatory interpretations more closely.

The deadline for responses to both proposals is 8 October 2025.

39. HMT announces series of major reforms to the financial services sector

On 15 July 2025, HM Treasury published a press release unveiling a package of reforms targeting the financial services sector, collectively referred to as the Leeds Reforms. The reforms were announced in Rachel Reeves' Mansion House Speech, delivered on the same date, as part of the UK's Financial Services Growth and Competitiveness Strategy.

The aim is to make the UK the number one destination for financial services businesses by 2035, attracting inward investment and creating good skilled jobs across the UK through the "Plan for Change".

The announced measures include:

• establishing a new regulated activity - targeted support - under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544);
• proposals to refine and simplify the Senior Managers and Certification Regime (SMCR);
• plans to update the consumer redress framework, including a joint consultation on reforming the Financial Ombudsman Service (FOS);
• an increase in the minimum requirement for own funds and eligible liabilities (MREL), alongside new rules for implementing Basel 3.1 reforms. This is with the intention to free up capital for banks to invest in the UK; and
• a review by the FCA into how the consumer duty applies to wholesale-facing firms, such as asset managers and investment banks.

40. ESMA publishes guidelines on outsourcing to cloud services providers by non-DORA depositaries

On the 11 July, ESMA published a final report on guidelines on outsourcing to cloud service providers, effective from the date of publication (EMSA65-29452987-2639).

They will revise and replace ESMA's previous guidelines which were finalised in December 2020.

Key points to note regarding the guidelines include:

• Narrowed scope: the revised Guidelines now apply only to depositaries of Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS) that are not subject to DORA. Most other financial entities are now regulated under DORA’s framework for digital operational resilience and ICT third-party risk; and
• No substantive content changes: the content of the Guidelines remains unchanged from the 2021 version. On this basis, ESMA did not consult on the revised guidelines.

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