Crypto, Compliance & the Changing Pensions Landscape

Unknown Speaker

Hello and welcome back to the B-Compliant podcast. Okay, so let's jump into this first topic: the FCA's massive review of regulatory data for over nine thousand firms. It's a - you know, it’s a pretty ambitious project. They’re reviewing over eleven thousand requirements, directions, and limitations. It's all part of their push to update their regulatory framework to be more efficient and, like, reflective of current realities.

Rachel MacRae

Nine thousand firms? Eleven thousand individual requirements? That sounds absolutely, frankly, monumental. How are they even managing all of that?

Unknown Speaker

I know, it does sound huge, but the FCA's breaking it down carefully. In some cases, they’re making automatic updates—like, where something’s just outdated terminology or a minor error, they’ll fix it without even notifying the firm.

Rachel MacRae

Wait, so firms might not even know changes have been made? That must feel a bit… unsettling.

Unknown Speaker

Well, yeah, I suppose it could, but that’s why they’re only doing it for immaterial updates. Plus, if it’s a bigger change, like removing a condition or altering a requirement significantly, they’re gonna reach out to the affected firm directly to discuss next steps.

Rachel MacRae

Ah, I see. So, if it’s a little tweak, like fixing a typo—no big deal. But for anything major, they’ll give you a heads-up. Makes sense. Still, I bet firms are gonna wanna keep an eye on things, just in case.

Unknown Speaker

Exactly! And actually, the FCA even suggested that firms should, sort of, download and keep a copy of their current permissions from the Financial Services Register—y'know, just for peace of mind until this whole review’s wrapped up.

Rachel MacRae

Okay, that’s smart. Kind of like taking a screenshot before doing a big software update on your phone—just in case something looks... different later. Do we know how long this whole review will take?

Unknown Speaker

Not really, no official timeline as far as I know. But honestly, with this scope, I’d guess it’s not gonna be finished overnight. Firms probably shouldn’t wait around though—they should make sure their data’s accurate now, so they can spot anything odd when the FCA makes updates.

Rachel MacRae

Got it. So, keep an eye on the Register, save a copy of your permissions, and if you get an email or call from the FCA, don’t ignore it. Simple enough. But, what do you reckon happens if someone's info is out of date to begin with?

Unknown Speaker

Oh, that’s a tricky one. I mean, the FCA hasn’t explicitly said what they’ll do in those cases, but from experience, they’d probably try to work with the firm to get everything straightened out. It’s just better to be proactive, you know?

Rachel MacRae

Yeah, yeah, fair. Hmm. With the scale of this, do you think the FCA’s just trying to preempt criticism—like, tidy their house before someone calls them out for holding outdated info?

Unknown Speaker

Maybe! I mean, they’ve definitely been under pressure to modernise and improve their efficiency as a regulator. Plus, with changing legislation and firms evolving, I think they’re just trying to make sure their database reflects reality—small errors or outdated stuff could lead to bigger problems if left unchecked.

Rachel MacRae

Makes sense. But seriously, this has so many knock-on effects, doesn’t it? Like, even how a firm appears on the Register might shift based on updates.

Unknown Speaker

Exactly. That’s why being vigilant is key. Hopefully, the FCA will get a nice, clean database out of this review—one that’s accurate and, importantly, useful for firms, clients, everyone involved.

Unknown Speaker

Speaking of regulatory updates, let’s shift gears to the FCA’s latest focus on cryptoasset regulation. They’ve released two new consultation papers: CP25/14 and CP25/15, and honestly, they’re a big deal for crypto firms in the UK.

Rachel MacRae

Oh, yeah, I saw those. I mean, crypto's been front and centre forever, but what’s new here?

Unknown Speaker

Well, CP25/14 is centred on stablecoins—basically, how issuers and custodians should operate. For example, if you’re issuing a stablecoin, you’ve gotta fully back it with high-quality, liquid assets—held in a statutory trust, no less. Plus, those assets have to be looked after by a custodian who’s completely independent of the issuer’s group. There’s no corner cutting here.

Rachel MacRae

Wait, wait, like, a statutory trust? That’s—

Unknown Speaker

Exactly what it sounds like: layers of safeguarding so investors’ funds are protected, even if the issuer folds. And stablecoin holders must be able to redeem their tokens at face value by the next working day. It’s basically about trust, transparency, and, you know, protecting everyone involved.

Rachel MacRae

Okay, that makes sense. I mean, confidence is everything, right? But, what about the custodians—are there rules for how they operate?

Unknown Speaker

Oh, yes. Custodians are under quite a microscope. They’ve gotta follow strict safeguarding rules: segregating client assets properly, maintaining solid governance structures, keeping impeccable records. And they’ll need to use trust structures to basically ring-fence clients’ funds.

Rachel MacRae

So, no dodgy accounting then—gotta love that. But this sounds... I dunno, Rachel-proof, if you will. Like, super robust.

Unknown Speaker

It is. And a big focus is on making sure everyone—not just regulators, but investors too—really understand what’s backing these stablecoins and how redemptions work. So, lots of clarity, lots of explanation.

Rachel MacRae

Right, leave no stone unturned. But, what about the second paper—CP25/15? Is it just more of the same?

Unknown Speaker

Not quite—CP25/15 looks at financial resilience. So, it’s about a new prudential framework for crypto firms. There are two new rulebooks they’re introducing: COREPRU for cross-sector baseline rules, and CRYPTOPRU, which is more specific to the crypto industry.

Rachel MacRae

Wait, CORE-what? That seriously sounds like a workout routine.

Unknown Speaker

I know, right? But this isn’t about sit-ups, it’s about capital and liquidity. The FCA wants crypto firms to hold specific types and amounts of capital—like Common Equity Tier 1—so they’ve got cushioning to absorb shocks and, you know, still operate safely.

Rachel MacRae

Okay, so kinda like an emergency savings fund but... for businesses instead of people. Gotcha. That actually sounds kinda clever.

Unknown Speaker

Exactly. And they’ve also included rules around managing liquidity and reducing the risk of firms becoming overexposed in any one area. So, it’s about, y’know, balancing innovation in the crypto space with safety and accountability.

Rachel MacRae

Hmm, makes sense. Oh—one thing I’m curious about. Does this mean financial advisers can finally start recommending crypto to their clients? Like, giving them the official green light?

Unknown Speaker

Ah, not so fast. The FCA made it really clear—advising on crypto, including stablecoins, is still firmly off the table for now. They’re not budging on that until the regulatory framework is more stable.

Rachel MacRae

Ooh, no surprises there. Bet they’re worried about another FTX-style debacle, yeah?

Unknown Speaker

Probably. And let’s face it, the landscape’s still too shaky to be giving financial advice—it’d be high risk for both advisers and their clients. Looks like we’re just gonna have to wait and see how this all evolves.

Unknown Speaker

Alright, switching gears a bit—let’s dive into pensions. The FCA has shifted focus here too, responding to the Treasury’s Pension Investment Review. They’re planning to contact firms next year for asset allocation data, all part of their broader push for better value-for-money in pensions.

Rachel MacRae

Ah, of course, pensions always come back to value-for-money, don’t they? But wait, asset allocation? What’s the story there?

Unknown Speaker

Well, it’s simple—kind of. The FCA wants to figure out how asset allocation decisions are being made so they can refine their framework. Basically, they’re looking for better transparency and consistency. They’ll start requesting data submissions in early 2026.

Rachel MacRae

Hmm, data submissions—that sounds thrilling. But, seriously, I get why this is important. If you don’t know where the money’s going, how can you tell if it’s actually good value-for-money?

Unknown Speaker

Exactly! It’s about holding pensions to a higher standard. And you know, it’s not just about allocating funds—it’s about improving the whole system, making pensions work better for people.

Rachel MacRae

Right, right. So, firms better be ready for that email. But can I say, the bigger buzz is still salary sacrifice. The rumors about changes there—yikes. They could really shake things up for employers and employees alike, couldn’t they?

Unknown Speaker

Absolutely, Rach. Salary sacrifice has long been a tax-efficient way for higher earners to boost their pensions. But now there’s speculation—thanks to that recent HMRC report—that the government’s eyeing reforms to plug holes in the budget.

Rachel MacRae

Oh, fantastic, another “reform.” So, what are we talking about here? Less relief? Capped sacrifices? And please tell me they’re not yanking the whole thing away.

Unknown Speaker

Well, nothing’s confirmed yet—but the HMRC research tested three scenarios: removing NI exemptions, removing income tax relief, or capping salary sacrifice amounts. Honestly, none of it sounds great for planning flexibility.

Rachel MacRae

Yeah, no kidding. I mean, isn’t salary sacrifice one of the few perks left for people trying to save seriously for retirement?

Unknown Speaker

It is. But, like with any tax advantage, it’s always on the government’s radar. Speculation is that reforms could come in the Autumn Budget, so advisers will need to be ready to tweak strategies for clients if changes happen.

Rachel MacRae

Gotta love a bit of last-minute scrambling. Still, it’s gonna hit hard if they water down the benefits, particularly for higher earners who rely on this for efficient planning.

Unknown Speaker

True—and it’s not just individuals impacted. Employers, too, might have to rethink their strategies, especially if contribution costs rise or planning flexibility is limited.

Rachel MacRae

Exactly. You know, this whole thing feels like preparing for a storm you’re not even sure is gonna arrive. But then, that’s financial planning for you—constant change, constant vigilance, right?

Unknown Speaker

Spot on. And that’s why staying proactive is key. Whether it’s VCAs, pensions, or potential tax reforms—keeping informed helps guide clients through all this uncertainty.

Rachel MacRae

Yeah, and honestly, that’s why it’s great we can talk about these things here. Knowledge is power, after all—or at least it’s cheaper than ignorance!

Unknown Speaker

Couldn’t agree more. Well, that wraps up today’s episode—thanks for listening, and we’ll see you next time for more insights into the ever-changing world of compliance.

Rachel MacRae

Bye for now!