Welcome to the latest edition of our investment management update.
This publication has been tailored to highlight topical news, cases and changes in the law impacting the investment management sector.
UK
- Information request to the Adviser & Intermediaries
sector: The FCA's May regulation round up reported
that the FCA will shortly be sending out an information request to
firms in the Adviser & Intermediaries sector as part of its aim
to minimise the regulatory reporting burden on firms.
Regulation round-up - May 2025
- Regulatory requirements, directions and
limitations: On 29 May 2025, the FCA confirmed that it is
reviewing and updating the requirements, directions and limitations
applied to over 9,000 firms. The FCA stated that where
"immaterial updates" are required, it will make these
automatically. Where "substantive changes" are required,
the FCA will contact firms to determine an efficient way of making
the change. The changes will take place over the next few months
and amendments may result in changes to firm information displayed
on the FS Register.
FCA updates to requirements, limitations and directions | FCA
- Cryptoasset regulation: Following the
Treasury's issue of draft legislation for regulating
cryptoassets in April 2025, the FCA published an accompanying FCA
discussion paper on 2 May. On 28 May 2025, the FCA published two
further consultations: (i) on proposed rules and guidance for the
activities of issuing a qualifying stablecoin and safeguarding
qualifying cryptoassets; and (ii) on the prudential requirements
for qualifying stablecoin issuers and cryptoasset custodians.
DP25/1: Regulating cryptoasset activities | FCA
CP25/14: Stablecoin issuance and cryptoasset custody
CP25/15: A prudential regime for cryptoasset firms
- Complaints reporting: On 22 May 2025, the FCA
published a consultation paper consulting on proposals to improve
the way regulated firms report customer complaints to the FCA and
the changes to the associated complaints reporting rules. Key
proposals include consolidating five existing returns into a single
return and revisions to the complaint categories. Responses should
be submitted by 24 July 2025.
CP25/13: Improving the complaints reporting process
- Growth strategy and the rebalancing of risk:
On 20 May 2025, the FCA's director of market oversight, Dominic
Holland, delivered a speech at the Association of Corporate
Treasurers Annual Conference 2025 entitled "rebalancing risk
to fuel growth". Mr Holland discussed the FCA's commitment
to rebalancing risk across the industry and the need for a balance
to be struck to allow for decreasing the regulatory burden but not
at the expense of consumer protection. The speech mentioned in
particular:
- the need for collaboration between firms and the FCA so that the FCA may help with capital raising and growing business and the economy;
- reducing the regulatory reporting burden;
- fuelling growth through reform of the primary market;
- digitisation and the FCA's desire to hear from firms on AI, regulation of crypto and fund tokenisation; and
- the move to T+1 settlement.
Rebalancing risk to fuel growth | FCA
- Final rules on investment research for UCITS, AIFMs and
Small AIFMs / CIS operators: On 9 May 2025, the FCA
published its final rules on the payment of research by fund
managers. The new rulesallow fund managers to pay for investment
research using a joint payment option for research and execution
services. The finalised rules are generally in accordance with
those set out in the consultation paper published in November 2024,
except for the inclusion of adjustments to the guardrail
requirements. In particular, the FCA has allowed more flexibility
by adjusting the guardrail of research budgets so that it can be
applied either at the fund level or aggregated across a fund range
that is appropriate to firms' investment processes for managing
the investments of the fund(s).
PS25/4: Investment research payment optionality for fund managers | FCA
- Review of business models: On 8 May 2025, the
FCA published its findings from a review of business models for
smaller asset managers and alternative investment fund managers
(with less than £1 billion AuM). The FCA set out examples of
good practice focusing on: high-risk investments, investor journey
controls and investor classifications; conflicts of interest; and
the application of the Consumer Duty to relevant business
models.
Smaller asset managers and alternatives business model review: our findings | FCA
- Consumer Duty – International payment pricing
transparency: On 1 May 2025, the FCA published details of
good and poor practice regarding how firms, whose services involve
currency conversion, communicate the costs of international
payments.
Consumer Duty: International payment pricing transparency – good and poor practice | FCA
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
