Data-Led Supervision, Scam Threats & Finfluencer Fallout

Unknown Speaker

Hello and welcome back to the B-Compliant podcast. Right, so this week we've had some big news. We have been informed that the FCA will be issuing a Section 165 mandatory information request. This is something all financial advice firms need to be aware of. The request is set to drop on June 30th —so just around the corner—and it’s all part of their data-led supervision approach.

Rachel MacRae

Okay, so let’s break this down for everyone listening. What exactly is the FCA asking for, and why now?

Unknown Speaker

Great questions. They’re focusing on four main areas: staffing levels in financial advice, active client numbers, advice processes and controls, and each firm’s business model and future plans. Essentially, the FCA’s trying to get a better understanding of the industry as a whole, and—honestly—it’s all about ensuring good outcomes for clients and stability across the market.

Rachel MacRae

I mean, it sounds logical. What’s the time frame firms are working with?

Unknown Speaker

Yep, deadlines vary depending on the size of the firm. Small firms, with five or fewer advisers, get 12 weeks to respond. Mid-sized firms, fewer than fifty advisers, get 10 weeks, and for large firms—those with fifty or more advisers—they’ll only get 8 weeks to turn this around.

Rachel MacRae

Oh wow, so not long at all for the bigger players. And they’ll be emailing this to firms, right?

Unknown Speaker

Exactly. The request will come from FinancialAdvisers2025@fca.org.uk, so firms need to make sure their contact details are up to date and ready to receive it. And I’d say, if in doubt, update your details anyway, just to be safe.

Rachel MacRae

Good advice. And for anyone listening who’s already feeling a bit overwhelmed, what should they be doing now to prepare?

Unknown Speaker

Well, no action is required just yet, but it’s a good idea to start thinking about those four key areas. Make sure your processes and documentation are in order, and if you think you might need help, get in touch with us. Honestly, we’re more than happy to support firms through this process. It’s what we do.

Rachel MacRae

And that’s the beauty of it, isn’t it? Knowing there’s someone to guide you through the maze of compliance, especially when things like this come up at full throttle.

Unknown Speaker

Absolutely. Staying ahead of these requests is the key to avoiding unnecessary stress later on.

Unknown Speaker

Now that we’ve covered the Section 165 request, let’s turn our attention to the FCA’s Policy Statement PS25/5. This focuses on updates to the Enforcement Guide—now referred to as the ENFG—and outlines how they’re taking steps to make enforcement actions more transparent and efficient.

Rachel MacRae

Okay, streamlined enforcement. That sounds like a good move. But what exactly’s changed?

Unknown Speaker

Well, quite a bit, actually. For starters, they’re retiring the private warnings as a formal tool. That means private warnings are no longer part of their arsenal, which is a shift away from informal enforcement measures. And then there’s their new approach to naming firms under investigation. It’s a little more open, but only in specific circumstances.

Rachel MacRae

Wait, so they can name firms more often? How does that work?

Unknown Speaker

Not exactly more often—it’s still based on their “exceptional circumstances” policy for regulated firms. But now, they’ve added three specific transparency measures. They can name subjects if it’s about unauthorized or unregulated activities and necessary to protect consumers. They can confirm investigations if it’s already public knowledge—and they might publish anonymised updates to, you know, promote compliance broadly.

Rachel MacRae

Ah, so it’s not a full name-and-shame kind of thing, then?

Unknown Speaker

No, not at all. They’re trying to balance transparency with the reputational risks and market stability concerns that come with naming firms prematurely. It’s about providing clarity where needed without causing panic.

Rachel MacRae

Makes sense. And the whole process is faster now, isn’t it?

Unknown Speaker

Exactly. Investigation times have been reduced—they’ve managed to wrap some cases up in under 16 months. Faster outcomes mean quicker resolutions for consumers, too.

Rachel MacRae

That’s huge. Speaking of enforcement actions, I saw that joint crackdown on finfluencers all over the news. What’s going on there?

Unknown Speaker

Yeah, finfluencers have been a big focus lately. The FCA, along with regulators from eight other countries, launched this massive operation to tackle illegal financial promotions on social media. They’ve been cracking down hard—issuing warning alerts, cease-and-desist orders, even making arrests. It’s really sending a message.

Rachel MacRae

Three arrests, right? That’s serious stuff. But why is this such a big issue now?

Unknown Speaker

Social media makes it so easy for unregulated promotions to spread, and that puts consumers at risk. The number of takedown requests and website warnings they’ve issued shows just how widespread this problem is. But they’re encouraging everyone to check the FCA Warning List before engaging with online financial products, which is a good starting point for staying safe.

Rachel MacRae

Agreed. That list is a lifesaver. Honestly, I think it’s great they’re doing this globally—it’s not just a UK thing anymore.

Unknown Speaker

Exactly, it’s a global issue that needs a coordinated approach, and that’s what this crackdown is delivering.

Unknown Speaker

Speaking of protecting consumers, let me tell you about something else regulators are grappling with—this scam email that’s supposedly from the FCA. It’s got a subject line that reads “Code Enforcement Notice,” and asks recipients to confirm they received some documents. The really worrying thing is it looks like it’s coming from a legit FCA email address.

Rachel MacRae

Oh no—so it’s one of those phishing scams, yeah? That’s… that’s clever. Creepy, but clever. What’s the risk here?

Unknown Speaker

Well, even though the email itself doesn’t seem to be an immediate threat—it’s not linking to malware or anything—it’s most likely being used as a sort of bait. If you respond, scammers can flag you for more targeted attacks down the line. It’s like putting a big red target on yourself or your firm.

Rachel MacRae

Yikes. And you know, I bet, some people could respond without even realising.

Unknown Speaker

Exactly. That’s why it’s such a good reminder for everyone to be extra vigilant. Phishing attacks like this are on the rise, and they’re getting more sophisticated. Financial advice firms, in particular, are huge targets because of the sensitive personal and financial data they handle.

Rachel MacRae

Right, so, what should firms be doing to protect themselves? Like, what’s the first line of defence?

Unknown Speaker

First and foremost, make sure your systems and controls are up to date. Things like multi-factor authentication, regular cybersecurity training for staff, and keeping software tools patched and current are key. I’d also recommend looking into cyber-specific insurance—it’s an extra layer of support if things go really wrong.

Rachel MacRae

Oh, I’ve seen a lot more talk around cyber PI insurance lately.

Unknown Speaker

Honestly, for firms managing client data, it’s pretty essential. Cyber PI insurance helps cover costs if there’s a breach—and some policies even include support for things like ransomware attacks or data recovery. It’s not something anyone wants to use, but it’s good to have in place.

Rachel MacRae

Yeah, I guess peace of mind goes a long way. And what about staff—how do you get everyone on the same page about spotting these scams?

Unknown Speaker

Training is a huge factor. Staff need to know what red flags to look for, like weird email addresses or unexpected links. It’s also really important to have a clear process for reporting suspicious emails. If something doesn’t feel right, it’s better to flag it and be safe.

Rachel MacRae

Totally. And it’s one of those things, isn’t it, where even a small mistake can snowball into a massive issue?

Unknown Speaker

Absolutely. A minor phishing attempt can quickly lead to a major data breach if it’s not caught in time. That’s why vigilance and a proactive approach are so critical in protecting against cyber threats.

Unknown Speaker

Okay, so moving away from cyber crime, there’s something else worth discussing—this new Pension Schemes Bill. It’s got a long-term focus—making pensions simpler for savers and trying to unlock more investment into the UK economy. It’s definitely a big one.

Rachel MacRae

Oh, I’ve been waiting for this one! So, what’s the headline here—like, what’s the main thing savers need to know?

Unknown Speaker

The big headline is value for money. This bill is all about ensuring savers aren’t stuck in underperforming schemes. Defined contribution, or DC, schemes are getting a new framework to make sure members are getting the best value. And small pension pots under a thousand pounds? Those will be automatically consolidated into good-value schemes to avoid unnecessary fragmentation.

Rachel MacRae

I love that. You know, it can get so messy with all these little pots floating around. And megafunds were mentioned too, right? What’s the deal there?

Unknown Speaker

Yes, megafunds are part of the plan. These are massive defined contribution funds with assets of at least 25 billion pounds. The idea is, by pooling resources, you reduce costs and widen investment options for members. It’s a smart way to create more efficient and impactful outcomes.

Rachel MacRae

That’s huge for, you know, long-term growth!

Unknown Speaker

Exactly. And for defined benefit schemes, flexibility is being introduced so surpluses—right now, we're talking about over 160 billion pounds—can be better utilised. Members and employers could see real benefits from this. Local Government Pension Scheme assets are also being consolidated into six professional pools to invest in things like infrastructure and clean energy.

Rachel MacRae

Clean energy—now that’s exciting! And honestly, this sounds like a win for everyone. But what about, um, FOS? I saw something about them proposing a change to compensation interest rates?

Unknown Speaker

Ah, yes, the Financial Ombudsman Service consultation. Right now, they apply an 8 percent simple interest rate when awarding compensation. But they’re proposing to change it to the Bank of England’s base rate plus 1 percent over the claim period. The idea is to make it more flexible and market-aligned, reflecting real economic conditions.

Rachel MacRae

Okay, so it’s still fair but—it kinda depends on the base rate?

Unknown Speaker

Exactly. For advisers, it should provide a more realistic and fair approach. This change won’t apply to existing cases, by the way—just new ones once it’s implemented. And anyone with thoughts on it can submit feedback to the consultation before the July deadline.

Rachel MacRae

Right, got it. It feels like pensions and compensation are getting some much-needed attention lately. So much change to keep up with!

Unknown Speaker

There really is, but it’s all aimed at creating a better future for savers and clients. And as always, for anyone listening, if you’ve got questions about how these changes impact your firm, get in touch. We’re here to make these shifts a little easier to navigate.

Rachel MacRae

Absolutely. Well, I think that’s a wrap for today, isn’t it?

Unknown Speaker

It is indeed. Thanks for joining us—and remember, staying ahead of compliance changes is key. Until next time, take care!