FCA, AEOI, and Compliance Updates for 2025

Unknown Speaker

Right, Rach, let’s kick things off with a biggie—the Automatic Exchange of Information, or AEOI. This is a hot topic because the registration deadline’s creeping up, especially for our listeners who might be handling multiple entities. So, under the UK’s rules, if you’re a Reporting Financial Institution—an RFI—or a Trustee-Documented Trust, you’ve got to get yourself registered with HMRC’s AEOI service by 31st December 2025. But don’t forget, if you only come into scope later, it’s 31st January following that year. This is a difficult one as a lot of firms aren’t sure whether they’re actually in scope.

Rachel MacRae

Yeah, absolutely. we've been hearing from a lot of clients who look bewildered when we start tossing around acronyms like “RFI” and “TDT”. If you’re wondering, “am I an RFI?”, basically, you’re in the net if you’re running an investment business or managing funds—like a DFM, AIFM, OEIC, or a trust that meets the ‘investment entity’ test. The fifty percent gross income thing always trips people up. Was it last year or two years for that assessment period, Vicky?

Unknown Speaker

It’s the relevant period—usually last year, but always double-check HMRC’s wording. And if you do qualify, the registration isn’t just box-ticking. HMRC wants details—contact name, email, phone and all that—and if you’re under FATCA as well, you’ll need a GIIN, or you can use that string of zeroes if you don’t have one. A Government Gateway organisation account is a must too. So, if you’re listening and you’ve got more than one entity, don’t forget—it’s one registration per entity, not just a main group registration.

Rachel MacRae

And the penalties! Can't leave this bit out—if you don’t register by that deadline, HMRC will hit you with a nice, festive thousand pound penalty to start you off, and it doesn’t stop there. If you ignore them, it’s £300 pound a day after that!

Unknown Speaker

You know, I had a client last week asking about this and they were confused about whether they were in scope, and this whole “investment entity” thing. We walked through the test, realised they were caught, and got the HMRC registration done. No penalties, thank goodness—and we clarified for them that if they’ve nothing to report, a nil return isn’t required for AEOI, though they could submit voluntarily. Oh, and heads-up, CRS 2.0 is coming soon, and some charities might be able to de-register after 1st January 2026—so watch this space, especially all charity trustees out there!

Rachel MacRae

Such a moving target, honestly… If you’re in doubt, grab the links we’ll have in our episode notes, but really—get those registrations sorted before Christmas, and you’ll avoid a world of pain come January. Right, Vicky?

Unknown Speaker

Absolutely. Don’t leave it ‘til the last minute. And remember, there are always little quirks in registration for trusts—like who’s the “reporting FI”, it’s usually the TDT itself shown as the reporting entity and the trustee goes down as the contact. Classic HMRC logic. Right, enough on that for a minute—should we move on to the mortgages and investments adventure?

Rachel MacRae

Let’s! The FCA has really gone for it with the mortgage market shake-up and the whole roadmap for 2026, hasn’t it? So, they’ve got these four priority themes—first-time buyer support’s front and centre, there’s big focus on later-life lending, and then there’s innovation and protections for vulnerable consumers. One thing that’s jumped out for me is the joint consultation coming with the PRA on high loan-to-income rules—that’ll be early 2026, for all you planners watching those criteria. I think they’re also looking at how interest-only and part-and-part repayment rules are working, especially credible repayment strategies?

Unknown Speaker

Yes, absolutely. And don’t forget, there’s ongoing work in the background on making advice models more holistic, so more people get actual guidance at all stages—not just first-time buyers but folks heading into later life or borrowing for the third time round. There’s a lot more on innovation as well, and actually, it feels a bit like what we talked about in last month’s episode, doesn’t it? That whole shift to outcome-based rules—here, it’s all about making the journey digital but still clear for clients. Oh, and by the way—they’re signalling some work on climate risk, economic abuse, and debt consolidation, so if that’s your niche, eyes peeled for those consultations.

Rachel MacRae

Yeah, and not just mortgages—the FCA’s new targeted support regime is coming too. It’s really set up to tackle the advice gap. Apparently, 23 million people are currently underserved, if you believe the FCA’s maths—less than 10 percent of adults received regulated advice last year! This ‘Targeted Support’ lets firms make suggestions for groups of people with shared needs or goals, rather than having to do a full bespoke recommendation for every single case. I love the idea, but firms need to label it clearly as ‘Targeted Support’, explain the segment, the product limitations—it’s not advice, it’s, well, target practice, nearly!

Unknown Speaker

yeah, it is! It all links back to Consumer Duty, right? So you’ve got to genuinely put consumers in a better place—well-designed segments, proper communications, no shortcuts. The gateway for permissions opens in March 2026, and final rules kick in from April. Oh, and for certain areas, like annuities, you can point people towards MoneyHelper but you can’t say, “buy this annuity”—so, clarity above all. And a review coming two years after launch, so the FCA’s watching closely.

Rachel MacRae

And there’s the other beast—the massive retail investment review. DP25/3 is asking everyone how well the current rules really support retail investors. There’s loads on digital influencing behaviour, so things like app push notifications, leaderboards, default amounts—are they making people trade too much or take too much risk? Crypto, CFDs, leveraged products—all those bits are under scrutiny. The FCA reckons rules have got complicated and a bit patchwork, so they’re thinking about making it all more risk-centred and clear, especially as new models like tokenisation, fractional shares come onto the market.

Unknown Speaker

It’s all tied to Consumer Duty again—firms have got to make sure that design choices actually help customers make good decisions, not just shove loads of complex info their way. The FCA’s also worried about things like self-certifying as high-net-worth—the thresholds haven’t changed since 2001!—so they’re looking at what safeguards are needed, even though that bit’s a Treasury job, technically. Just a heads-up, there aren’t immediate rule changes, but they are absolutely signalling that reforms are coming once this review wraps up in March 2026.

Rachel MacRae

And then, shiny new disclosure regime arrives—goodbye PRIIPs and UCITS docs, hello CCI regime! Vicky, have you read the rules in PS25/20? It’s all about plain language, much less jargon, and a proper product summary, now. So, after a sale, you get this clear summary—shows headline costs as a percentage and pounds and pence, and that new ten-point risk scale—makes the old “1to7” system look like ancient history. And illiquidity bumps the risk score! It’s so much clearer, honestly.

Unknown Speaker

Yes! And the biggest change—manufacturers make the summary, distributors can’t tweak it, but are responsible for highlighting it to customers before the sale. You’ve got to give the basics on product, charges, and risk score during the customer journey, not just dump a PDF in a corner of your website. Implementation’s 18 months from December 2025, so it’ll be summer 2027 by the time everyone has to comply. Early adoption’s possible from April 2026 if anyone’s feeling brave—just like we always say, better to start early and iron out the kinks in your consumer journey before the FCA comes calling!

Rachel MacRae

Couldn’t agree more. Alright, shall we get into everyone’s favourite—non-financial misconduct and the insurance reforms?

Unknown Speaker

Let’s do it. The FCA’s new guidance on non-financial misconduct—so that’s things like bullying, harassment, violence—is crystal clear now. From 1 September 2026, all this falls under the Conduct Rules for non-banks, so it’s the same high bar that applies in banking. Firms bear the main responsibility to nip this in the bud, but there’s proper support in the new guidance—examples, flowcharts, decision-trees, the lot! There’s also alignment with employment law, which should hopefully put to bed some of the old confusion around what you can and can’t investigate.

Rachel MacRae

I love that they’ve clarified this, because honestly, some of the old conversations we’ve had with clients—you get everything from “should we discipline over a single rude email” to “how do we handle off-site behaviour that seems iffy?” Now, the FCA says you don’t have to go hunting after trivial or completely out-there allegations. Crucially, there’s also a focus on fitness and propriety—they’re saying private life conduct can matter if it signals a real risk of future breaches or might dent public trust. But, and this is important, don’t trample privacy or break employment law in the process!

Unknown Speaker

Exactly. It’s never about just ticking boxes for the FCA, it’s about setting that healthy culture where everyone knows what’s expected—especially now with these clear definitions in the rules.

Rachel MacRae

And then, insurance reforms! PS25/21 is here, bringing a wave of simplifications but no let-up in standards. Big headline—the end of the blanket 15-hour CPD minimum for insurance distribution staff. But, lest anyone celebrate too much, that doesn’t mean you can just skimp on training. Firms now have to work out the right CPD per role, based on risk and duties—it could be more than 15 hours, in some cases, fewer only for the rarest of jobs. The aim is quality, not quantity, and it’s got to be robustly justified and documented.

Unknown Speaker

Spot on. There’s also a new division between large commercial customers and specialist risks, which lines things up nicely with DISP—simplifies client categorisation, for anyone still living in spreadsheet hell! Product reviews are more flexible, too: set your own frequency based on actual risk, document your thinking, and you’re good. Some annual reporting requirements have gone, but don’t relax just yet—the expectations on suitability and governance haven’t eased up. It’s just streamlined for sensible firms who keep their house in order.

Rachel MacRae

And consults are coming for 2026, including for non-UK business. So—keep an eye out if you’re cross-border. Basically, it’s a good moment to look at your CPD, product review cycles, and your training for all sorts of conduct, financial or not. As always, if you want a thriving, trusted firm, it starts with people understanding the why as much as the what. Right, Vicky?

Unknown Speaker

Couldn’t have put it better, Rach. So that’s your full tour of the FCA’s festive feast of updates—AEOI, mortgages and investments, misconduct rules, and insurance reforms. As always, there’s loads more in the pipeline for 2026 and ’27, but that's all from us for 2025, we're taking a well earned break over the festive period, so we’ll be back in the new year with fresh briefings and a few more stories from the coalface. Until then, have a lovely Christmas and thanks for tuning in!

Rachel MacRae

Cheers, Vicky! And thanks to all our listeners—send us your questions for the next episode. Have a brilliant end of the year, everybody. Bye for now!