FCA Simplifies Rules and Enhances Compliance Tools

Vicky Pearce

Hello and welcome back to the B-Compliant Podcast. So this week the FCA has released Consultation Paper CP25/10, and it’s proposing a simplification to how investment firms define their regulatory capital. You know, this has been a long time coming, especially under MIFIDPRU 3. The idea is to strip out all of these outdated references to the UK Capital Requirements Regulation—

Rachel MacRae

Which, let’s face it, it was made for banks, not investment firms. Right?

Vicky Pearce

Exactly. It was overly complex for firms in this space. What’s interesting here, though, is that the actual levels of regulatory capital firms need to hold—well, those aren’t changing. The focus is purely on making the rules more accessible, clear, and proportionate for investment firms.

Rachel MacRae

Right, and by simplifying the definitions, they’re cutting the text down by, like, 70 percent? That’s a massive reduction. I mean, can you imagine the difference that’s gonna make when firms look at these rules?

Vicky Pearce

It’s a huge benefit. And they’re not just reducing the volume for the sake of it; they’re consolidating everything into MIFIDPRU 3, so it’s all in one place now. The eligibility rules have been reworked too—they’re focusing on core traits like loss absorption, permanence, and flexibility in distributions for CET1, AT1, and Tier 2 capital.

Rachel MacRae

Oh, the high-quality stuff, right? That’s what makes the system robust?

Vicky Pearce

Yeah—high-quality capital is what keeps the system ticking. What’s even better is that these changes align with the UK’s broader ambitions to reduce barriers and encourage innovation, all without undermining market integrity or consumer protection.

Rachel MacRae

It’s kind of like creating a smoother path for firms to thrive, yeah?

Vicky Pearce

Spot on. This is all part of an ongoing strategy to create a standalone prudential sourcebook, one that’s tailored specifically to investment firms. And it reduces reliance on outdated banking regulations. Both us as consultants, and are going to welcome this change, especially since consultation feedback is due by June 2025, with rules likely coming into effect by early 2026.

Rachel MacRae

Oh, so we’ve got some time, then. But still, any kind of simplification of the handbook rules is good news.

Vicky Pearce

Absolutely, and hopefully it'll make this element of regulation more manageable for small firms.

Rachel MacRae

Speaking of regulatory updates, did you see how the FCA is set to change communications next? From April 2025, they’re retiring those portfolio letters and introducing market reports instead?

Vicky Pearce

That’s right. Portfolio letters, which firms have gotten used to over the years, are being phased out. Instead, the FCA is moving towards these market reports, which they’re framing as a more focused and streamlined way of sharing updates and insights across different firm types.

Rachel MacRae

And what about the old letters? I mean, what happens to them?

Vicky Pearce

Well, the FCA will mark them as “historical” and remove them from their main pages. They’ll still be accessible through existing links but flagged as no longer current, except for a few key exceptions like Dear CEO letters, which are sometimes used to address significant issues directly with senior management.

Rachel MacRae

Okay, so it’s not like they’re disappearing altogether. That’s a relief for anyone thinking they’d lose access to important guidance overnight.

Vicky Pearce

Exactly. But the shift means that firms will need to rely on these new market reports for supervisory updates instead of looking for portfolio letters. It’s part of the FCA’s broader goal to simplify and modernise how they engage with firms.

Rachel MacRae

Kind of like the rest of their communications strategy, right? Like when they talked about reducing regulatory friction and helping productivity?

Vicky Pearce

Yeah, it’s all interconnected. The aim here is to make these reports more targeted, so firms aren’t wading through unnecessary information. That’s especially useful for businesses trying to navigate the ever-growing list of compliance requirements these days.

Rachel MacRae

And let’s face it, anything that makes compliance just a little easier is a good thing. But how do you think firms should handle this transition?

Vicky Pearce

It’s all about staying proactive—familiarising themselves with these upcoming changes and checking the historical portfolio letters for any relevant guidance before April 2025. After that, it’ll be about following the new reporting framework as it rolls out and keeping an eye on those new updates from the FCA.

Rachel MacRae

So, no more excuses for missing updates, then?

Vicky Pearce

Exactly. And it’s just another way the FCA is steering firms towards a more modern and manageable system.

Vicky Pearce

Speaking of modernising processes, let’s talk about the My FCA platform. It’s quickly becoming the go-to tool for regulated firms to manage their compliance needs more effectively, isn’t it?

Rachel MacRae

Yeah, I’ve noticed it popping up on the FCA homepage and even on the Connect and RegData login pages. It’s like they’re saying, “Hey, we’ve got this shiny new platform—use it.”

Vicky Pearce

Exactly. And for good reason. I had a look at it recently, and I’ve gotta say, the layout is so much more intuitive. One of the best features they’ve added is the ‘Next Tasks’ reminder section. It gives you, like, a clear snapshot of all your upcoming deadlines.

Rachel MacRae

Which is perfect, because, let’s be honest, remembering all those compliance dates across the systems can be a nightmare. So having them sat right on a dashboard? That’s a game-changer.

Vicky Pearce

It really is. Things like annual attestations are now right there on the platform. Firms won’t have much of an excuse for missing deadlines, you know?

Rachel MacRae

And the best part is, you don’t even need to mess with new login details. It’s all integrated with your existing Connect or RegData logins. Just hop on and have a look around.

Vicky Pearce

Exactly. It’s clear the FCA is steering firms toward using My FCA more heavily moving forward. So, my advice? Log in and get familiar with it now, while there’s no immediate pressure like, you know, an approaching deadline.

Rachel MacRae

And hey, if it makes compliance easier, I say, why not? I mean, who doesn’t love saving a bit of stress?

Vicky Pearce

Absolutely. Less stress, more organisation—it’s a win-win for everyone.

Rachel MacRae

Speaking of making things easier for firms, it looks like the FCA’s been updating their Knowledge Base as well. Those changes seem to have been rolling out gradually, don’t they?

Vicky Pearce

They absolutely have. This is part of the updates outlined in Primary Market Bulletin 55—continuing the work they started with earlier bulletins like PMB 48, 50, and so on. But this time, the focus is on aligning periodic reporting obligations with the European Single Electronic Format taxonomy—DTR 4.1, to be specific.

Rachel MacRae

Which sounds pretty techy, but basically it’s about improving digital reporting standards, right?

Vicky Pearce

Exactly, it’s all about making reporting more structured and, well, future-proof. But it’s not just about the tech. These updates also include adjustments to technical notes on things like inside information handling and issuer obligations, which tie in with the UK Listing Rules.

Rachel MacRae

Okay, so they’re basically housekeeping, but on a much bigger scale?

Vicky Pearce

That’s one way to put it. But the changes are also part of a larger shift—moving toward streamlined, more modern regulation. Think about how they’ve been tweaking sponsor obligations and other listing elements over the years. It’s all pointing in the same direction.

Rachel MacRae

True. And it does tie back to what we’ve seen with other FCA initiatives—you know, lessons learned from reforming regulatory structures that weren’t fit for purpose anymore.

Vicky Pearce

Absolutely. These gradual updates are paving the way for a regulatory framework that’s not only easier to understand but also easier to comply with. And that’s critical, especially for market participants juggling multiple complex processes.

Rachel MacRae

It’s nice to see the FCA evolving with the times, though. I mean, let’s face it, a lot of the old ways were anything but streamlined.

Vicky Pearce

Oh, absolutely. And these updates include that feedback mechanism, with responses invited before May 2025. That ensures stakeholder voices are heard, which is crucial for staying relevant and effective.

Rachel MacRae

So, my takeaway here is, watch this space, but don’t panic. The changes are on their way, but they’re not going to suddenly drop on firms overnight.

Vicky Pearce

Exactly. Firms have time to get their ducks in a row. It’s just about being aware and prepared for when the updates officially roll out.

Rachel MacRae

Well, on that note, I think we’ve covered quite a lot today. Capital rules, communications, platforms, and now the Knowledge Base—what a whirlwind of updates!

Vicky Pearce

We really have. And it just shows how much the compliance landscape continues to evolve. But that’s all we’ve got time for today. Thanks for joining us—see you next time.

Rachel MacRae

Bye for now!