Regulatory Round-up - November 2025

FCA Regulatory Update

At RB Compliance we aim to keep our clients fully up to date with the latest FCA regulatory news, we do this through our monthly newsletter (sign-up using the box to the right of your screen) and through our bespoke regulatory updates, designed specifically for your company. If you're interested in the bespoke service contact me at: robert.bell@rbcompliance.co.uk

November 2025 has been another busy month of regulatory updates, here is our summary of the 'best bits':

Motor Finance Redress Scheme

Affected firms will need to keep a close eye on updates as the FCA works quickly to finalise rules for the scheme. The consultation deadline has been extended to 12 December, however the FCA still expect to keep to the initial February/March date for publication of final rules.

Frequently Asked Questions have been added to the Redress Scheme main webpage, aiming to clarify some questions about the expected content of communications, liabilities in relation to 0% APR deals, deceased customers, forbearance or missed payment in the calculation of consumer harm, and the opt-in/out status of consumers whose complaints have already been rejected because they were not eligible on the DCA ground but did have one of the other two grounds.

Remuneration Reform

The FCA and PRA’s joint Policy Statement sets out the final policy on changes to remuneration rules for dual-regulated firms. The rules will also be of interest to solo-regulated investment firms, and firms that are members of a group to which the dual-regulated remuneration regime applies on a consolidated basis.

The changes come into force on 16 October 2025 and apply to a firm’s performance year starting after that date.

The changes aim to make the regime simpler while promoting competitiveness and growth through reducing the number of those subject to remuneration rules, simplifying the approach for identifying Material Risk Takers, bringing rules on deferral of variable remuneration more in line with international practice, and ensuring that variable remuneration better reflects risk taking outcomes and individual responsibilities.

Risk assessment processes and controls in firms

The FCA shared findings and highlight good and poor practice following a 2025 review. The findings centre around firm processes for business-wide risk assessments (BWRA) and customer risk assessments (CRA). The FCA evaluated controls against the MLRs, the Financial Crime Guide, SYSC, JMLSG guidance and FATF guidance.

Good practice often goes beyond the minimum regulatory requirements but shows how firms approach these topics.

In identifying, understanding and assessing risk, good practice included weighted risk assessments that are quantitative and qualitative and consider a range of internal and external factors, are formally assessed yearly (rather than simply refreshed) and are tailored to the firm, products, and customers. Poor practice included where BWRAs were focused on generic risks, oversimplifying risks, missing quantitative analysis and were not supported by appropriate evidence.

In mitigating risk, good practice included considering capacity of functions to support growth strategy, assessments fed into the firm’s wider work and CRAs which directly impact CDD and transaction monitoring, action tracking and considering financial crime risks in product development, strategy and sales discussions. Poor practice included where firms had not developed their CRAs in line with business growth, failure to record actions or assign owners, and rapid expansion without considering controls.

In managing risk, good practice included sharing the BWRA document and summary with senior management for review and approval, documenting risk assessment methodologies in detail, and regular reviews. Poor practice included failing to document senior management discussion, a narrow focus on fraud, limited or no testing, and a static approach to assessment.

The FCA expects firms to already be complying with existing requirements and they encourage firms to consider these findings and suggestions within the context of their organisations.

We are launching a risk assessment template to add to our ever growing compliance resources, see here: FCA Template Documents | RB Compliance Consultancy

Multi-firm review of consolidation in the financial advice and wealth management sector

The FCA has made it clear that it sees both benefits and risks where firms acquire or merge with other advice firms, usually when buying books from retiring advisers or larger firms acquiring small or mid-sized firms. The multi-firm review considered a sample of groups acquiring IFAs and established wealth management businesses, and focused on debt structures, organisational structures, approach to regulatory consolidation, treatment of group risk, overall risk management, governance and resourcing and approach to integration.

Good practices highlighted include:

• Groups with a clear structure, strong governance and risk management processes are likely better placed to achieve sustainable growth and deliver good outcomes for clients, staff and shareholders.

• Groups ensuring regulated entities were well resourced and resilient despite debt levels elsewhere in the group.

• Groups considering risks across all entities, capturing capital and liquidity needs created by these risks.

Practices which could increase harm include:

• Groups which are not prudentially consolidated. This can lead to a difficulty recognising, measuring, or mitigating group risk. This may also limit regulatory oversight of group debt, goodwill and associated risks.

• Group debt arrangements weakening the resilience of regulated entities. This includes regulated entities transferring cash to unregulated parent companies via intra-group loans or guaranteeing the holding company’s debt, exposing them to the group’s financial and operational risks.

• Groups failing to grow their compliance and governance infrastructure to keep pace with their rapid growth.

ICO call for view on enforcement guidance

The consultation – open until 23 January 2026 – aims to introduce more detailed guidance on the process the ICO use to carry out investigations and what happens when they decide to take enforcement action around data protection issues.

This guidance would replace the existing statutory guidance set out in the Regulatory Action Policy. The ICO are particularly asking for views on whether there is a preference for consolidated guidance for all three regimes involved, or separate guidance for each.

Firms that track regulatory developments carefully are better positioned to protect their business and maintain compliance. The Consumer Duty promised fewer changes to the Handbook; 2025 has shown that emerging market issues means firms need a clear grasp of the FCA’s expectations in fast-moving areas.

What Next?

A bespoke regulatory update, curated by our in-house experts gives your firm’s Senior Management a clear and curated view of what’s changing and what’s coming next. Instead of reacting to reforms once they’re finalised, our detailed document enables financial services firms to gain an early understanding of the themes, proposals and supervisory priorities most relevant to their activities. Contact Robert Bell to find out more.