Industry News — Regulation
Last updated 6 hours agoThe most significant development today is the FCA's sweeping expansion of its financial crime agenda, with executive director Steve Smart confirming that the regulator will assume Anti-Money Laundering supervision of 60,000 legal and accounting firms by end-2028, supported by AI systems processing 56 million records daily and a raised SAR threshold of £3,000. This sits alongside a formal investigation into Euro Exchange Securities UK Ltd for potential breaches of the Money Laundering Regulations 2017 and joint FCA, HMRC, and Metropolitan Police enforcement raids on unregistered peer-to-peer crypto trading premises in London. Separately, the FCA's non-financial misconduct rules came into force on 1 September, extending conduct obligations to prohibit bullying and harassment across approximately 37,000 firms — making culture a direct compliance requirement for IFA practices. On Consumer Duty, both the CII and FCA multi-firm reviews confirm that outcome evidence, not process documentation, is now the regulatory benchmark, with CP26/23 also proposing to replace co-manufacturing terminology with a clearer principal and secondary manufacturer framework ahead of a Q1 2027 implementation target.
Court sets trial date in illegal financial promotions case
The FCA has secured a trial date of 12 June 2028 against Lucy Beck, charged with unauthorised promotion of FX CFDs via social media and websites in breach of FSMA 2000 sections 21 and 25. Beck has entered a not guilty plea at Southwark Crown Court. This case underscores the FCA's enforcement priority against unregulated financial promotion, particularly on social channels—relevant context for advisers managing their own digital communications and client referral protocols.
PIMFA warns 'further clarity' needed in FCA's proposed SIPP changes
The FCA's CP26/20 consultation on SIPPs (closing 24 August) proposes standardised due diligence requirements and strengthened controls over pension asset handling across the market. PIMFA broadly supports the direction but has flagged that several requirements lack sufficient clarity regarding firm-level expectations and proportionality of checks. IFAs involved in SIPP distribution or administration should review the consultation paper to understand the proposed standards and consider whether their current due diligence and asset-handling procedures would meet the FCA's intended expectations, particularly where the guidance remains ambiguous.
FCA bans three behind £35.5m scheme designed to bypass investor visa rules
The FCA has banned three senior figures at Dolfin Financial (UK) for operating a £35.5m scheme that enabled clients to circumvent Home Office Tier 1 investor visa requirements by paying a £400,000 fee instead of investing the required £2m. Former CEO Denisz Nagy and finance director Sanjay Maraj have been fined £324,800 and £122,000 respectively (after 30% settlement discount) and banned from financial services, while co-founder Roman Joukovski faces an outright ban. The enforcement action covers conduct spanning 2016–2019 and reinforces the FCA's expectation that firms implement effective controls to prevent facilitation of regulatory evasion across immigration and financial services rules.
'Watershed moment' as FCA's non-financial misconduct rules come into force
The FCA's non-financial misconduct (NFM) rules came into force on 1 September, extending its code of conduct to prohibit bullying, harassment, and other misconduct not directly related to financial services delivery across approximately 37,000 regulated firms. The rules require firms to demonstrate substantive detection and response mechanisms beyond policy documentation alone, with regulators expecting evidence of robust investigation and remediation capabilities. This applies broadly to IFAs and their support staff, making culture and conduct frameworks a direct compliance obligation rather than a best-practice consideration. Firms should review their investigation procedures, staff training, and documented responses to allegations to evidence compliance.
Proving good customer outcomes still a challenge for financial planners
The CII's latest roundtable report on Consumer Duty board reporting highlights that financial planning firms continue to struggle translating outcome reporting into demonstrable evidence of good customer outcomes, despite producing increasingly sophisticated data-rich reports. Firms cite ongoing unfamiliarity with regulatory expectations and a need for practical, proportionate guidance to close the gap between reporting compliance and substantiating actual customer benefit. This reflects an evolving FCA focus on outcomes evidence rather than process documentation alone, requiring advisers to strengthen the link between reported monitoring and documented client value delivery.
FCA bans trio behind £35.5m scheme designed to bypass visa rules
The FCA has banned three former senior figures at Dolfin Financial—chief executive Denisz Nagy (fined £324,800), finance director Sanjay Maraj (fined £122,000), and co-founder Roman Joukovski—for operating a scheme between 2016–2019 that enabled approximately 99 clients to obtain investor visas by paying £400,000 fees instead of making the required £2m genuine investments, generating £35.5m in revenues. Nagy and Maraj deliberately concealed the scheme from the FCA and Home Office; Joukovski additionally acted as an undisclosed shadow director and controller. Joukovski has referred his ban to the Upper Tribunal, meaning it has no immediate effect pending determination. IFAs should ensure robust compliance controls around client investment genuin
Young investors trust AI more than TV or celebrities
The FCA has published research showing that 80% of younger investors (18–40) use AI for investment support, with 56% trusting AI more than traditional media sources, though this preference continues to grow. The research reveals a significant protection gap: whilst 73% understand AI can provide inaccurate information and 86% know to verify sources, most investors appear unaware of limited regulatory safeguards when relying on general-purpose AI tools for investment decisions. General-purpose AI chatbots remain unregulated; only tools explicitly designed to provide financial advice fall within the FCA's remit. IFAs should be alert to clients using unregulated AI for research and may need to address misconceptions about protection and reinforce the importance of due diligence when clients reference AI-derived information in investment discussions.
FCA urges young adults to check for unclaimed Child Trust Funds
The FCA has issued guidance urging young adults (aged 18–24, born between September 2002 and January 2011) to trace matured Child Trust Funds worth an average of £2,000 each, of which 760,000 remain unclaimed; the regulator warns against using third-party claims firms charging substantial fees (up to £400 or monthly subscriptions) when tracing is available free via GOV.UK. IFAs should be aware that firms offering Child Trust Fund tracing services may not be FCA-authorised, meaning customers lack protection under claims management fee caps and Financial Ombudsman Service access. The FCA is launching a formal review next year examining contactability failures, fair value under Consumer Duty, and barriers for vulnerable young adults, signalling potential future regulatory tightening in this area.
Better outcomes begin when payment firms understand customers’ needs
The FCA's consumer vulnerability review found that payments and e-money firms delivering the best outcomes use simple, customer-centred approaches to understand vulnerability and adapt support accordingly—such as callback services for customers with limited IT literacy. Under the Consumer Duty, all firms must ensure good outcomes for retail customers in vulnerable circumstances, with approximately half of UK adults displaying at least one vulnerability characteristic. Rather than relying solely on policies and procedures, successful firms use management information, complaints data, and customer feedback to verify that arrangements work in practice and adjust where needed. The FCA emphasises that proportionate approaches—including basic board-level review of vulnerability identification, vulnerability types, and complaints patterns—are sufficient for smaller firms and do not require sophisticated systems.
FCA opens investigation into Euro Exchange Securities UK Ltd
The FCA has opened a formal investigation into Euro Exchange Securities UK Ltd for potential breaches of the Money Laundering Regulations 2017, specifically concerning failures in customer risk identification, risk assessment documentation, and anti-money laundering controls between February 2020 and June 2026. The investigation centres on whether EES failed to conduct adequate AML risk assessments across customer, geographic, product and transaction dimensions, and whether corresponding policies and procedures to mitigate identified risks were deficient. No conclusions have been reached and EES has not been found to have breached requirements; advisers should monitor the FCA's enforcement register for outcomes. IFAs should note this as a reminder of heightened FCA focus on AML control frameworks, particularly around documentation and control maintenance in smaller regulated firms.
FCA sets out steps to support small businesses’ access to finance
The FCA has published findings from its SME access to finance review, concluding that its own regulation is not a major barrier, though microbusinesses face particular challenges including limited awareness of finance options, complex application processes, and difficulties with collateral assessment. The regulator will focus on three areas to reduce friction: supporting proportionate regulation, improving information clarity, and enabling open finance benefits. The FCA has identified issues outside its remit—such as alternative lending barriers—and has escalated these to relevant government departments. IFAs should note this positions the FCA as supportive of SME finance access whilst clarifying that regulatory barriers are not the primary constraint.
FCA and partners continues crackdown on illegal crypto trading
The FCA, HMRC, and Metropolitan Police Service have conducted joint enforcement operations targeting three London premises engaged in unregistered peer-to-peer crypto trading, issuing cease and desist letters to suspected operators. Peer-to-peer crypto trading conducted as a business in the UK requires FCA registration; currently no such firms are registered, and operating outside this regime creates money laundering risks and avoids AML controls. IFAs should be aware that the FCA and law enforcement are actively disrupting this activity, and clients engaged in or considering such trading should be directed to check FCA registration via Firm Checker before transacting. This follows previous enforcement action in April, with evidence supporting ongoing criminal investigations.
Financial crime: protecting the hive
Steve Smart's speech outlines the FCA's evolving approach to financial crime supervision, emphasizing intelligence-led, technology-enabled enforcement and sector-specific partnership. The FCA will assume AML supervision of 60,000 legal and accounting firms from end-2028, applying a risk-based approach adapted to these sectors rather than a one-size-fits-all model. Key priorities include disrupting Annex 1 firms exploiting AML weaknesses, leveraging AI to process 56 million records daily for early risk detection, and reducing compliance burden where possible (such as raising the SAR threshold to £3,000). IFAs should expect proportionate, risk-based supervision focused on detecting criminal enablers; those implementing genuine controls need not expect increased regulatory friction, but those facilitating financial crime should anticipate detection and enforcement action.
David Ferguson: The regulator has moved on. Has the industry?
The FCA is advancing regulatory frameworks—including new Targeted Support rules and ongoing simplification of the pensions and investment advice framework—to create a broader continuum of guidance and advice, reducing reliance on traditional full-advice models. However, the industry's legacy technology, operating models, and unit economics are not yet aligned to deliver commercially viable propositions at lower wealth thresholds, despite regulatory permission. Firms must invest in scalable, efficient infrastructure to genuinely support customers across different life stages and asset levels; regulatory flexibility alone cannot overcome structural cost barriers. IFAs should assess whether their current operating model and technology can accommodate evolving customer journeys and lower-value interactions, as competitive advantage will depend on flexibility rather than breadth of proposition.
FCA bans asset management firm’s CEO and MD
The FCA has banned Paul Taylor (former CEO of Blue Horizon Asset Management) and Esmeralda Toni (former MD) from performing regulated functions, imposing fines of £489,000 and £121,200 respectively. Taylor falsified documents claiming ownership of a €200m bond portfolio during two attempted acquisitions (a UK bank and Reading Football Club), while Toni knowingly assisted by making misleading statements and helping create false documents; both breached Individual Conduct Rule 1 by acting dishonestly with intent to mislead regulators and counterparties. Both individuals received 30% settlement discounts after agreeing to resolve the FCA's findings. The action reinforces the regulator's expectation that those in financial services maintain absolute honesty, particularly when information is likely to be relied upon by the FCA and P
FOS expands powers to dismiss complaints
From 1 October, the FOS will gain new powers to dismiss complaints deemed unsuitable for ombudsman resolution, including cases better suited to courts or law enforcement, and those with no financial loss or material distress—reforms jointly consulted with the FCA as part of broader redress system changes. A new registration stage will be introduced in 2025 to screen complaints for scope and readiness before caseworker allocation, with differential case fees to be consulted on separately. The FOS will also clarify that its decisions apply standards from the time of the complained-of act or omission, preventing retrospective application and aligning with proposed legislative changes to its remit in the Financial Services and Markets Bill. IFAs should anticipate that certain client complaints may face earlier dismissal and prepare for potential fee changes, while noting FOS and FCA joint thematic
FCA expands Scale-up Unit with five high-growth fintechs
The FCA has expanded its Scale-up Unit to admit five FCA-regulated fintechs (ClearScore, Modulr, Teya, Urban Jungle, Zilch) alongside the six dual-regulated firms already participating, providing tailored regulatory guidance on product development, policy navigation, and growth management. A pilot involving 15 high-growth firms identified that early investment in governance, risk management and controls correlates with sustainable expansion. The Scale-up Unit operates within the FCA's broader innovation support ecosystem, and applications for the next cohort will open shortly. IFAs advising high-growth fintech clients may wish to encourage their participation or direct them to the relevant application process.
Gareth Fatchett: The FCA won’t stop your advisers taking clients
The FCA does not restrict departing advisers from taking clients or prevent clients from following them to new authorised firms—this has never been a regulatory objective. The Consumer Duty reinforces client choice and does not provide commercial protection for retaining client relationships; it ensures clients understand their options and are treated fairly. Contractual protections such as restrictive covenants, confidentiality clauses, and garden leave provisions drafted before adviser departures occur are the appropriate mechanism for protecting client relationships. IFAs should focus on well-structured employment and consultancy agreements rather than expecting regulatory intervention to prevent client mobility.
threesixty: Co-manufacturing – an end to the confusion?
The FCA has proposed removing the term 'co-manufacturing' and replacing it with a clearer framework distinguishing between principal manufacturers (substantive control over design/operation) and secondary manufacturers, addressing longstanding market confusion since the concept's introduction in 2022. The proposals, outlined in CP26/23 (29 June 2026), maintain focus on Consumer Duty compliance and price/value outcomes—each firm must clearly evidence tangible value for fees received. The consultation closes 18 September 2026, with new rules expected Q1 2027. IFAs involved in multi-party product arrangements should review their co-manufacturing relationships now to ensure compliance documentation is robust, particularly regarding fee allocation and value articulation.
Joe Norburn: Preventing foreseeable harm in an evolving Consumer Duty landscape
The FCA's Consumer Duty expectations have evolved beyond implementation compliance toward demonstrating active prevention of foreseeable harm in deteriorating market conditions. Firms must treat product governance, fair value assessment, and customer communications as ongoing processes that adapt to emerging customer behaviour—not periodic exercises—as traditional metrics (complaints, arrears) may lag early warning signs. IFAs should review whether their management information captures early risk signals, whether fair value assessments reflect actual current usage patterns, and whether customer communications remain effective under financial stress. No new rules have been introduced, but the regulatory bar has raised: firms must evidence how they anticipate and respond to evolving harm risks or face regulatory scrutiny.
Kadra Aden: Use technology to meet Consumer Duty challenges, not a compliance team
The FCA is actively supervising Consumer Duty compliance and has conducted multi-firm reviews; firms relying on manual processes, spreadsheets, and paper-based evidence trails risk regulatory enforcement and financial provisions. The article argues that adviser firms should prioritise technology solutions generating timestamped, system-generated audit trails within suitability and annual review workflows, rather than treating Consumer Duty as primarily a compliance staffing challenge. A technology-led approach reduces manual error, automates evidence generation, and provides a clearer regulatory conversation than demonstrating ad-hoc documentation; moreover, structured digital processes will increasingly matter for firm valuation and consolidation prospects. Given the FCA's planned intensified supervision from 2026, firms should audit whether their current systems automatically evidence Consumer Duty obligations or rely on post-facto manual compilation.