FCA Updates: Simplification, Consumer Impact, and Enforcement Trends

Vicky Pearce

Hello and welcome once again to the B-Compliant AI Podcast, thanks for joining us! Alright, so we are kicking off with some good news from the FCA with Consultation Paper CP25/8. Essentially, they’re looking to cut down on unnecessary reporting for firms. It’s all part of their Transforming Data Collection programme, which, as the name suggests, is all about modernising how regulators like the FCA collect data. The goal here? Make the process more efficient and less of a headache for firms.

Rachel MacRae

Ooh, I love this already! Compliance getting less complicated? Sounds like a win. So tell me, which reports are we actually talking about here?

Vicky Pearce

so, they’re targeting three specific ones: FSA039, RMA – Section F, and Form G. Now, FSA039? That one was pretty much redundant already. The FCA realised that the same info is either duplicated elsewhere, like in the Client Money and Asset Return, or just not detailed enough to be useful.

Rachel MacRae

Ah, so kind of like decluttering your house and realising you’ve got five of the same mug you never use? It’s just taking up space?

Vicky Pearce

Exactly that, Rachel. And same goes for RMA – Section F. The data there is now captured better through other systems, like the Connect system for notifications. As for Form G, they’ve decided it’s just excessive and unnecessary now, especially with oversight already being handled through things like the Senior Managers and Certification Regime.

Rachel MacRae

Alright, I get it. So, they’re basically Stacey Solomon-ing reporting requirements. Love it.

Vicky Pearce

Spot on. But they’re not stopping there. They also plan to streamline the FCA Handbook by chopping out 140 pages of outdated guidance. That includes things like older references to reports that don’t even exist anymore and outdated EEA passporting provisions. It’s supposed to make the whole thing easier to navigate.

Rachel MacRae

Okay, so fewer pages to scroll through, that's good, but given the size of the handbook I'm not sure that we'll see much benefit from this reduction.

Vicky Pearce

Well, it’s a step in the right direction, at least. And they’re taking a pretty pragmatic approach during the consultation period. So, until 14 May 2025, firms will still see the affected returns in RegData, but – and here’s the good bit – the FCA won’t be chasing firms for submissions, and they’re even waiving late return fees for these forms!

Rachel MacRae

Wait, so they’re not just cutting things but also being supportive while firms adjust? That’s a bit of a rarity from the regulator, isn’t it?

Vicky Pearce

I think it's a first from the FCA to be honest, and it shows a more collaborative stance, which we love to see. Of course it's still provisional at this stage, so firms will have time to weigh in during the consultation.

Rachel MacRae

Hmm. Streamlined reporting and more practical policies? Sign me up!

Vicky Pearce

Right, Rach, speaking of simplifying processes, let’s dive into CP25/9. This one shifts focus to the Consumer Composite Investments regime. The FCA is eyeing some major updates here, with one standout proposal being the simplification of cost disclosures. They’re suggesting dropping the need for firms to calculate implicit transaction costs, like slippage, and instead requiring disclosure of explicit costs only—things like broker fees or stamp duty.

Rachel MacRae

Okay, hold up. So they’re ditching the hidden stuff and just sticking to what’s plain and obvious? That feels, I don’t know, refreshing. But does it mean investors might miss out on some important details?

Vicky Pearce

That’s the concern some people have raised, yes. On one hand, it’s meant to make things clearer for consumers. They won’t get bogged down with overly complex details that could confuse them. But some argue that implicit costs, while trickier to calculate, still matter when assessing total investment value.

Rachel MacRae

Right, I mean, it’s one thing to simplify, but at what point does “simple” become “oversimplified”? That’s the balance they’ve got to find.

Vicky Pearce

Exactly. And firms won’t have to rush to comply, as the FCA’s giving them a generous 18 months to adjust once they finalise the rules. Plus, they’ve got the option to adopt the new requirements earlier if they’re ready.

Rachel MacRae

Oh, that’s handy. It’s like getting a head start if you’re keen, but no penalties if you take your time. Still though, doesn’t that make the transition a bit uneven? Some firms using one set of rules, others on a new one?

Vicky Pearce

It could. The flexibility is great for easing the workload, especially for smaller firms, but you’re right. It might result in a bit of inconsistency while everyone gets on board. The FCA’s hoping that the phased approach makes the overall move smoother.

Rachel MacRae

Hmm, fingers crossed it doesn’t end up a mix-and-match mess. But what’s driving all this? Just the usual goal of making compliance a tad less painful?

Vicky Pearce

Partly. But the overarching aim is improving consumer engagement. They want the information to be straightforward, accurate, and easy to compare across investments. Studies have shown that when financial communications are clearer, investors make more confident, informed decisions.

Rachel MacRae

I mean, that makes total sense. If I see a jumble of numbers and jargon, I’m more likely to stick it in the “too hard” pile. Better clarity means more action, right?

Vicky Pearce

That’s the idea. And the FCA will be monitoring how all this plays out through its own supervision activities, complaints data, and even consumer research like the Financial Lives Survey. And they've said they’ll keep tweaking if needed.

Rachel MacRae

Ooh, real-time feedback loops. I like it. Let’s see if consumers actually feel the difference.

Rachel MacRae

Speaking of the FCA keeping a close eye on things, Vicky, let’s delve into enforcement – it's crunch time for some firms, isn’t it? NatWest, Santander – pretty hefty fines for anti-money laundering issues.

Vicky Pearce

Yeah Rach. NatWest got hit with a 264 million pound fine, and Santander wasn’t far behind with over £107 million. Both penalties stemmed from failings in their AML controls. It’s a clear signal from the FCA that issues like poor due diligence and letting flaws linger won’t be tolerated.

Rachel MacRae

Yikes. But honestly, what were they thinking? Rapid growth without scaling up compliance? It’s like trying to run a marathon in flip-flops.

Vicky Pearce

Exactly. It’s not just negligence; it’s about prioritization. Growing responsibly means making sure your compliance frameworks can handle that growth. But what’s striking here is how technology could step in—things like digital ID and AI tools to enhance AML processes. The FCA is actively exploring them.

Rachel MacRae

Digital ID and AI? Now that sounds like something firms should jump on. Less manual slog and fewer screw-ups, right?

Vicky Pearce

Right. But adoption still needs careful planning. Speaking of scrutiny, fraud within the financial sector is also a hot issue right now. Have you seen the case against John Burford?

Rachel MacRae

Oh, the guy accused of misleading investors and running unauthorised investment schemes worth over a million pounds? That’s insane.

Vicky Pearce

It is. Cases like this underline the FCA’s growing focus on cracking down harder on fraud and misconduct. They’re not just going after egregious cases, but they’re also paying more attention to firms with weak controls. This means that prevention has got to be a priority, not an afterthought.

Rachel MacRae

Totally. And honestly, it sounds like firms really need to step it up. What’s the takeaway here? Is it just “don’t get caught with your compliance pants down,” or is there more to it?

Vicky Pearce

Well, it’s about having robust frameworks in place that can adapt and grow. Focus on areas the FCA is homing in on – AML, fraud prevention, and insider trading. Use the tech tools available, train your teams regularly, and most of all, keep a zero-tolerance approach to misconduct. If firms show they’re proactive, that can go a long way in reducing risk and fostering trust with regulators.

Rachel MacRae

Proactive, not reactive. Got it. You know, all this enforcement talk’s a bit heavy, but also kinda energising. The FCA’s not messing around, and it means we’re moving toward a safer, better-regulated industry.

Vicky Pearce

Couldn’t agree more, Rach. And for firms listening, take these cases as... not warnings exactly, but lessons. Compliance isn’t just about ticking boxes; it’s about building stronger, better organisations that can withstand scrutiny and earn trust.

Rachel MacRae

Spot on. Well, Vicky, looks like we’ve packed a lot into this episode. Anything else you wanna add before we wrap up?

Vicky Pearce

Only that compliance is never static. The FCA’s evolving expectations mean that even when it feels like you’ve got it all figured out, there’s always scope to improve. But if you stay informed, act with integrity, and embrace the support available, you’re gonna be fine.

Rachel MacRae

Well said. Right, that’s all for this episode, folks. Thanks for tuning in, and we’ll catch you next time on the B-Compliant Podcast.

Vicky Pearce

Take care, everyone!