FCA’s artificial intelligence (AI) testing service

• On 29 April 2025, the FCA announced that it is launching a live AI testing service which will form part of the FCA’s AI lab. This will allow firms to collaborate with the FCA whilst ensuring their new AI tools are ready to be used by consumers and will provide the FCA with intelligence to understand how AI may impact UK financial markets. The service will provide regulatory support to firms ready to deploy consumer or market-facing AI models and will run for 12-18 months with plans to launch in September 2025. 

FCA set to launch live AI testing service | FCA

FCA growth strategy

• On 29 April 2025, the Chancellor, Rachel Reeves, announced at the Innovate Finance Global Summit 2025 that she will publish the financials services growth and competitiveness strategy on 15 July 2025 at Mansion House.

Chancellor speech at Innovate Finance Global Summit 2025 - GOV.UK

SDR and portfolio management

• On 29 April 2025, the FCA confirmed that they are no longer planning to publish a policy statement in Q2 2025 to extend the Sustainability Disclosure Requirements (SDR) and investment labels regime to portfolio management. The FCA explained that despite the broad support for their earlier proposals (set out in CP24/8: Extending the Sustainability Disclosure Requirements (SDR) regime to Portfolio Management), they have decided it is not the right time to finalise the rules. The FCA did however set out high-level feedback to the consultation responses they received. 

CP24/8: Extending the SDR regime to Portfolio Management | FCA

Latest approach to the FCA's supervisory letters

• On 24 April 2025, the FCA announced that from 30 April 2025, the FCA will no longer issue or publish portfolio letters, but will instead publish a market report including communications relevant to various firms. Please see our article for further information on the FCA’s announcement. 

Proposed simplification of capital rules

• On 24 April 2025, the FCA announced measures to simplify its capital rules by proposing changes to the definition of capital which applies to MiFID investment firms. The proposed new measures are set out in CP25/10: Definition of capital for FCA investment firms. The proposals seek to: 
  • consolidate existing requirements applicable to MiFID firms in the UK Capital Requirements Regulation into MiFIDPRU 3; 
  • remove provisions relevant only for banks; and 
  • simplify existing requirements,

in order to create a single coherent handbook chapter in MiFIDPRU on what constitutes own funds. 

The FCA claims that the changes would reduce the volume of legal text by 70%. The FCA has said that if a firm’s own funds currently meet FCA requirements, it should continue to do so under the new regime.

FCA’s AI sprint

• On 23 April 2025, the FCA published a summary of their two-day AI sprint. This event involved 115 participants from industry, academia, regulators, technology providers, and consumer representatives. They discussed how AI may develop in financial services over the next five years and the FCA’s role in enabling firms to embrace the benefits of AI whilst managing the risks. 

AI Sprint summary | FCA

Consultation on CCI

• On 16 April 2025, the FCA published a second consultation on the new Consumer Composite Investment regime (the CCI Regime). The FCA published its first consultation on the CCI Regime at the end of last year. The latest consultation covers proposals on:
  • removing the requirement for firms to calculate and disclose implicit transaction costs;
  • simplifying overall cost disclosures by aligning other cost disclosure rules to CCI requirements; and
  • further transitional provisions.

The deadline for responses is 28 May 2025.

CP25/9: Further proposals on product information for Consumer Composite Investments

FCA reducing reporting burden for 16k firms

• On 16 April 2025, the FCA announced that it is proposing to remove unnecessary data reporting for firms. The FCA proposes to stop collecting data from three forms. 

CP25/8: Data Decommissioning: Removing reporting and notification requirements | FCA

April 2025 Regulatory Initiatives Grid

• On 14 April 2025, the Financial Services Regulatory Initiatives Forum published the 8^th edition of their Regulatory Initiatives Grid (the Grid). This is the first publication of the Grid since the change of Government last summer. The Grid sets out planned regulatory initiatives for the next 24 months.

Regulatory Initiatives Grid - April 2025

Retail banks’ treatment of vulnerable customers

• On 12 April 2025, the FCA published the findings of its review on how retail banks and building societies approach the treatment of customers in vulnerable circumstances, such as those in bereavement or with powers of attorney. Although the findings are most relevant to banks and building societies, certain findings will also be relevant to other firms when dealing with vulnerable customers. 

Retail banks’ treatment of customers in vulnerable circumstances Multi-Firm Review: good practice and areas for improvement | FCA

Trading apps and consumer behaviour

• On 11 April 2025, the FCA published a “multi-firm review of trading apps: high-level observations”. Key findings related to:
  • Business models: The FCA highlighted the different capacities in which firms were operating and flagged that firms must fully understand their obligations as both manufacturers and distributors;
  • Revenue drivers: The FCA noted the different revenue streams including transaction fees on trades, subscription fees, and interest earned from cash balances. Firms need to assess whether their pricing structures provide good value for consumers;
  • Digital engagement practices (DEPs): Firms should consider if the DEPs are inappropriately manipulating or exploiting retail customers’ behavioural biases; and
  • Appropriateness testing: While some firms had strong processes for assessing customer understanding of high-risk investments, others lacked adequate checks, potentially exposing consumers to unnecessary risks.

Multi-firm review of trading apps: high-level observations | FCA

Nikhil Rathi reappointed as FCA chief executive

• On 10 April 2025, HM Treasury announced the reappointment of Nikhil Rathi as the chief executive of the FCA for a second term. The new term will run until September 2030. 

Nikhil Rathi reappointed as FCA chief executive | FCA 

FCA annual work programme 2025/26

• On 8 April 2025, the FCA published their 2025/26 work programme detailing what they will deliver with regard to their four strategic priorities (as set out in the FCA’s five-year strategy published in March). Their four priorities are:

1. being a smarter, more efficient, and more effective regulator;
2. supporting growth;
3. helping consumers navigate their financial lives; and
4. fighting financial crime.

High on the FCA’s list are actions to reduce the regulatory burden by streamlining data collection and rules. Other areas included working with the Financial Ombudsman Service and the Treasury to modernise the redress framework, accelerate digital innovation, and enhance the FCA’s supervision model. 

FCA annual work programme 2025/26 | FCA

Support for innovative products and new firms part of new FCA work programme | FCA

UK AIFMD II

• On 7 April 2025, HM Treasury and the FCA issued the first of an expected series of proposals to reform the UK regime for regulating alternative investment fund managers. Please see our article for further information on the proposals and/or watch our webinar with AIMA, “Webinar Playback: UK FCA Revised Rules on Asset Management”. 

Derivatives trading obligation and post-trade risk reduction services

• On 3 April 2025, the FCA published a policy statement on the derivatives trading obligation (DTO) and post-trade risk reduction services (PTRRS). The FCA is expanding the DTO to include certain classes of secured overnight financing rate index swaps, in the UK and other jurisdictions, from swaps based on LIBOR to those based on risk-free rates. The changes to PTRRS include exempting firms from certain requirements, such as the obligation to report to the public the transactions that arise in connection with the use of PTRRS. The changes will come into effect on 30 June 2025. 

PS25/2: Derivatives trading obligation and post-trade risk reduction services

FCA presence in United States and Asia-Pacific

• On 15 April 2025, the FCA announced that it is establishing a presence in the United States and Asia-Pacific as part of its new strategy to support growth by improving exports and inwards investment. 

FCA establishes presence in the United States and Asia-Pacific | FCA