On 6 March 2025, the Payment Systems Regulator (PSR) published the final report of its market review into card scheme and processing fees (MR22/1.10). Background The PSR explains that it is crucial this market works well, as cards are the most popular way for consumers to pay for goods and services in the UK. Each time someone uses a debit or credit card for transactions with UK businesses, those businesses pay scheme and processing fees, some of which are mandatory or core and some of which are optional. Following increases in these fees, PSR has been examining their levels to understand whether they, or other factors, indicate the market is not working well. Findings Through its market review, the PSR found that between 2017 and 2023, core scheme and processing fees were raised by more than 25% in real terms. It also found that the schemes do not provide sufficiently clear and detailed information to acquirers or merchants, resulting in them receiving complex or incomplete information on scheme and processing services and fees, raising both acquirers’ and merchants’ costs and preventing them from negotiating a better deal. As a result of its findings, the PSR plans to consult shortly on potential remedies to address the issues identified in the report.

In the first in our new mini-series exploring the UK’s new Consumer Composite Investments regime, Matthew Gregory, Joe Bamford and Simon Lovegrove set the scene by covering at a high level who the new regime applies to, the impact on unauthorised firms, disclosures and timing generally. Listen to the podcast here.

On 6 March 2025, the European Banking Authority (EBA) published a consultation paper setting out draft Regulatory Technical Standards (RTS) as part of its ongoing implementation of the EU’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) package. The draft RTS will be part of the EBA’s response to the European Commission’s (Commission) Call for Advice. The Commission requested the EBA to prepare these draft RTS to support the launch of new EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) operations. The EBA will submit the standards to the Commission on 31 October 2025. The draft RTS address several important aspects of the EU AML/CFT framework, notably: Selection criteria for direct AMLA supervision (Article 12(7) of the Anti-Money Laundering Authority Regulation (AMLAR)): AMLA will initially identify institutions for direct supervision based on their cross-border activities. Subsequently, AMLA will apply a harmonised methodology to assess money laundering and terrorist financing (ML/TF) risks uniformly. ML/TF risk assessment methodology (Article 40(2) of the Sixth Anti-Money Laundering Directive (AMLD6)): Introducing a standardised risk assessment methodology for national supervisors to evaluate inherent risks, effectiveness of controls, and residual risks consistently. This uniform approach is intended to deliver more consistent supervisory outcomes across Member States and reduce compliance burdens for cross-border firms. Customer due diligence (CDD) standards (Article 28(1) of the Anti-Money Laundering Regulation (AMLR)): Establishing a flexible yet clearly defined framework outlining the scope and quality of information institutions must collect during CDD processes. Institutions will retain discretion in selecting appropriate documents and information sources within regulatory parameters, enabling them to balance effective compliance with operational efficiency. Sanctions and administrative measures (Article 53(10) of AMLD6): Setting uniform criteria and indicators for imposing pecuniary sanctions, administrative measures, and periodic penalty payments. This ensures enforcement across the EU is proportionate, effective, and consistent. The consultation runs until 6 June 2025, after which the EBA will review submissions and finalise the RTS for its response to the Commission’s call for advice. The EBA will also hold a virtual public hearing on the consultation paper on 10 April 2025 (registration is required).

On 6 March 2025, the European Securities and Markets Authority (ESMA) issued a letter to the European Commission (dated 3 March 2025) which set out delayed and deprioritised deliverables. Among the delayed and deprioritised deliverables are: AIFMD Review – Regulatory technical standards (RTS) on open ended loan originating alternative investment funds – initial deadline 16 April 2025 – delay by 6 months. Central Securities Depositaries Regulation – RTS on buy-in – initial deadline 17 January 2025 – delay until T+1 implementation is complete. European Market Infrastructure Regulation 3 – RTS on central counterparty interoperability and RTS on post trade risk reduction services – initial deadline 4 December 2025 – delay by 6 months. MiFIR/D Review – RTS on order execution policies – initial deadline 29 December 2024 – delay by 6 months.

On 5 March 2025, the Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2025 (the Order) was laid before Parliament and published on legislation.gov.uk, along with an explanatory memorandum. The Order amends the Financial Services and Markets Act 2000 (Exemption) Order 2001 to broaden the scope of the exemption granted to National Wealth Fund Limited (the Company), exempting it from the general prohibition (under section 19 of the Financial Services and Markets Act 2000) in respect of all regulated activities. The Company (which previously operated as UK Infrastructure Bank Limited) is wholly owned by HM Treasury and operates with the aim of helping tackle climate change and supporting regional and local economic growth. The Government announced in October 2024 that the Company would operate with a broader mandate, more capital and the ability to offer an expanded suite of financial products, including performance guarantees. The changes made by the Order are intended to enable the Company to carry out those broader activities.

On 5 March 2025, the Prudential Regulation Authority (PRA) published a consultation paper, CP2/25, on the Leverage Ratio: changes to the retail deposits threshold for application of the requirement. Background The leverage ratio is intended to give a simple percentage indicator of how much capital a firm has to fund its activities. Firms with over £50 billion in retail deposits, or £10 billion in non-UK assets, are currently required to meet a minimum leverage ratio requirement of 3.25% plus buffers. These thresholds took effect in 2016 and 2023 respectively and are designed to capture major UK banks, building societies and investment firms. Proposed increase Under the proposals, the PRA would increase the retail deposits threshold by £20 billion to £70 billion, which it explains is to reflect nominal GDP growth since 2016. The higher threshold is intended to ensure that major UK firms continue to be captured, whilst smaller firms below the new threshold would have more space to grow before becoming subject to the leverage ratio requirement. The £10 billion non-UK asset threshold would remain the same, as it was implemented much more recently than the retail deposits threshold and the PRA notes that it continues to operate as intended. Commenting on the proposals, the PRA’s CEO and Deputy Governor for Prudential Regulation, Sam Woods, highlighted that whilst it is essential to protect against excessive leverage in the banking system, this must be done in a proportionate way. The proposals set out in CP2/25 aim to support growth and innovation by giving smaller banks more space to grow before entering the leverage regime. Next steps The consultation closes on 5 June 2025.

On 5 March 2025, the European Banking Authority (EBA) issued a Discussion Paper on fees to be paid by financial and non-financial counterparties requiring the validation of pro forma models under the European Market Infrastructure Regulation (EMIR). The European Commission previously issued a request for technical advice on a possible delegated act on fees to be charged to financial and non-financial counterparties requiring the validation by EBA of pro forma models, with the request to submit such advice by Q2 2025. The Discussion Paper outlines: The EBA budgeting approach (section 4.2). The main EBA costs incurred by the EBA for the performance of its new tasks resulting from its new role as central validator of pro-forma IM models (section 4.3). The expected fees per counterparty including the calculation methods (section 4.4). The modalities of payment (section 4.5). Next steps The consultation closes on 7 April 2025.

On 5 March 2025, the European Commission issued a Notice which contains technical clarifications responding to frequently asked questions on the technical screening criteria set out in the Taxonomy Climate Delegated Act (including the amendments to the Taxonomy Climate Delegated Act) and the Taxonomy Environmental Delegated Act, as well as the disclosure obligations for the non-climate environmental objectives laid down in the amendments to the Taxonomy Disclosures Delegated Act.

On 26 February 2025, the European Commission published an “Omnibus package” aimed at simplifying and aligning its sustainability reporting and due diligence laws. The Omnibus seeks to introduce amendments to the EU Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CS3D) and Taxonomy reporting. The proposal consists of two draft Directives which cover, respectively, a) dates for implementation and b) scope of application and substantive requirements. In our briefing note we consider the substantive amendments to the CSRD and CS3D and the new thresholds and implementation dates.

On 5 March 2025, the Financial Conduct Authority (FCA) published its detailed findings from its multi-firm review of valuation processes for private market assets. Background The FCA sees good valuation practices as key to maintaining fairness and confidence as the private market grows. There is also global interest in valuation practices in private markets with, for example, the International Organization of Securities Commissions previously issuing a report which highlighted a relative lack of transparency and consistency in approaches to valuations. The FCA’s review assessed the robustness of firms’ valuation processes and governance, including the checks and balances that help address the risk of poor conduct and harm to investors. It did not seek to independently validate firms’ fair value assessments for specific assets. The FCA’s findings will primarily be of interest to asset managers, alternative investment fund managers (AIFMs), investment and portfolio managers and investment advisers. The key message from the regulator is that whilst firms generally demonstrated good practice in certain areas such as investor reporting there are areas that need improving including better identification and documentation of potential conflicts of interest in the valuation process. Findings In summary, the FCA found examples of good practice in firms’ valuation processes, including the quality of reporting to investors, documenting valuations, using third-party valuation advisers to introduce additional independence and expertise, and consistent application of established valuation methodologies. In some areas, such as transparency and disclosure, good practice went beyond existing requirements and the FCA has set out some of these so that firms may consider them. The regulator also identified areas where firms needed to make improvements. For example: Whilst all firms identified conflicts in their valuation process around fees and remuneration, and in many cases had limited these through fee structures and remuneration policies, other potential conflicts were only partly identified and documented. These included potential valuation-related conflicts related to investor marketing, secured borrowing, asset transfers, redemptions and subscriptions and uplifts and volatility. The FCA expects firms to identify, document and assess all potential and relevant valuation-related conflicts, their materiality and actions they may need to take to mitigate or manage them. Firms had different levels of independence within their valuation processes. The FCA expects firms to assess whether they have sufficient independence in their valuation functions and the voting membership of their valuation committees to enable and ensure effective control and expert challenge. Many firms did not have defined processes or a consistent approach for ad hoc valuations to revalue assets during market or asset-specific events. Firms are encouraged to consider the types of events and quantitative thresholds that could trigger ad-hoc valuations and document how they are to be conducted. Next steps The FCA expects firms to consider the findings from the review and identify any gaps in their approach, considering their size and the materiality of identified gaps. In particular, the regulator expects firms to consider whether they should make improvements in: The governance of their valuation process. Identifying, documenting, and addressing potential conflicts in their valuation process. Ensuring functional independence for their valuation process. Incorporating defined processes for ad hoc valuations. The findings will be used in the FCA’s review of Alternative Investment Fund Managers Directive as it updates its rules in the Handbook and will inform the FCA’s contribution to IOSCO’s review of global valuation standards to support the use of proportionate and consistent valuation standards globally in private markets.

On 28 February 2025, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM) reminded companies offering group insurance policies of the upcoming licence requirement, effective 1 October 2025. This requirement follows a 29 September 2022 ruling by the Court of Justice of the EU, clarifying licensing obligations for group insurance providers. What is Group Insurance? The AFM notes that group insurance is an agreement where a company acts as the policyholder and adds customers (individuals or businesses) as insured parties. If a customer consciously chooses to be insured under the policy and the company receives remuneration, the company will be considered an insurance intermediary and must obtain a licence from the AFM as of 1 October 2025. Remuneration includes any financial or non-financial benefit, except for passing on premiums and administrative costs. If no financial advantage is involved, no licence is required. Exemption to the licensing requirement Companies offering group insurance may qualify for an exemption under Article 7 of the Exemption Regulation under the Financial Supervision Act (Vrijstellingsregeling Wft) insofar as their activities only relate to the collection of premiums. This article provides that, under certain circumstances, persons who carry out insurance mediation activities complementary to the supply of a product or service, i.e. ancillary insurance intermediaries, are largely exempt from the Act on the Financial Supervision, if: the insurance covers the risk of breakdown, loss of or damage to the product supplied by the ancillary insurance intermediary; or the insurance covers non-use of a service supplied by the intermediary. The premium may not exceed €600 on a pro rata basis per year in the cases mentioned under (i) and (ii), or in case it is complementary to a service and the duration of the service is equal to or less than three months, the premium may not exceed €200 per person. Although the exemption generally applies to affiliated companies, the AFM allows group insurance policyholders to also rely on it if they can demonstrate that the insurance product meets the ancillary insurance intermediary exemption criteria. Timeframe for licence application Companies requiring a licence must apply before 1 October 2025. The AFM takes at least 13 weeks to process applications, so submitting well in advance is recommended.

On 28 February 2025, the House of Commons (HoC) Work and Pensions Committee announced that it would hold an evidence session to examine progress towards delivering online pensions dashboards, which are intended to enable individuals to find information on all of their pension pots and their value in one place. While it is not yet clear when the first pensions dashboard will be introduced, pension schemes and providers are required to have their data ready for the dashboards by 31 October 2026. However, the Committee flags that recent news reports have raised concerns as to whether this is achievable. In the evidence session, the Committee will therefore ask industry representatives about (among other things) their preparation to have the data ready to share by the autumn 2026 deadline and their experience of developing commercial dashboards. It will also question representatives from the Financial Conduct Authority and The Pensions Regulator, both of which have jurisdiction over elements of the dashboards project, on how they are working with each other and stakeholders to ensure reasonable and responsible regulation. There will also be evidence from the Money and Pensions Service, which oversees the Pensions Dashboard Programme and construction of the Government’s MoneyHelper dashboard, on the industry reaction to and progress towards a staged connection between industry data and the dashboards (which aims to help prevent technical hitches on the deadline date for data preparation).

On 28 February 2025, the Financial Conduct Authority (FCA) issued Handbook Notice 127. This Handbook Notice describes the changes to the FCA Handbook and other material made by the FCA Board under their legislative and other statutory powers on 30 January and 27 February 2025. On 30 January 2025, the FCA Board approved these instruments which were set out in Policy Statement 25/1: Commodity Derivatives (Position Limits, Position Management and Perimeter) Instrument 2025. Markets in Financial Instruments (Non-Equity Transparency Rules) (Amendment) Instrument 2025. Technical Standards (Commodity Derivatives) (Position Limits, Management and Reporting) Instrument 2025. On 27 February 2025, the FCA Board approved the Consumer Credit (Regulatory Reporting) (Amendment) Instrument 2025. On 6 December 2024, the FCA published Consultation Paper 24/26 (CP24/26) which set out certain miscellaneous amendments to the Handbook including amendments to SUP 16.11, SUP 16 Annex 20G and SUP 16 Annex 21R, to clarify or improve the wording for better understanding in relation to consumer credit product sales data reporting. In Handbook Notice 127 the FCA provides feedback on this part of CP24/26 and sets out final rules. The FCA Board also approved the Sustainability Labelling and Disclosure of Sustainability-Related Financial Information (Amendment) Instrument 2025. In CP24/26 the FCA consulted on amendments to the Environmental, Social and Governance (ESG) sourcebook and certain guidance provisions in other related sourcebooks for the purposes of clarifying certain existing rules and giving proper effect to the policy proposals consulted upon in Consultation Paper 22/20 and finalised in Policy Statement 23/16. In Handbook Notice 127 the FCA provides feedback on this part of CP24/26 and sets out final rules.

In our latest Global Regulation Tomorrow Plus podcast, Kevin Harnisch, Mark Highman, Katie Stephen and Hannah McAslan-Schaaf discuss the failure to prevent fraud offence under the UK’s Economic Crime and Corporate Transparency Act 2023, which comes into force on 1 September 2025, and how it might impact US firms. Listen to the podcast here. For further resources in relation to the offence, please see our dedicated failure to prevent fraud knowledge hub.

On 27 February 2025, the Financial Conduct Authority (FCA) published a speech on supporting growth, delivered by its chief executive Nikhil Rathi at the Association of British Insurers roundtable. In the speech, Mr Rathi covers topics including: Consumer Duty champions: From 27 February 2025, firms will be able to choose whether to have a Consumer Duty champion. (The FCA published more information on this on its Consumer Duty – information webpage.) Progress on growth proposals: Mr Rathi notes that the industry “may be surprised in the coming weeks at the pace we will move on the 50 or so growth proposals we made to the Prime Minister”, including in relation to mortgage affordability, digital payments, removing redundant data returns, supporting international promotion of UK financial services, opening up to more innovative firms and cutting barriers between regulators. Risk in relation to consumer harm: As it works with the Government on its financial and professional services strategy, one area where the FCA has asked for bold thinking is around articulation of the Government’s risk appetite – particularly in relation to consumer harm. Mr Rathi notes that the FCA would value metrics against which it can be held to account. Call for input on simplifying the Handbook: The FCA has received 170 responses from firms of all sectors and sizes as well as consumer groups, and is working through the feedback. Points raised in the responses included concerns around the pace of regulatory change, and the FCA is aiming for fewer large-scale changes in its next 5-year strategy, although given the diversity of views there is a debate to be had around the speed of change. Consumer resilience: Although it is “serious about growth”, the ability of consumers to access the right products for them (i.e. good quality, fair value products) when they need to is central to the FCA’s purpose and will be an important part of its next 5-year strategy.

On 27 February 2025, the European Banking Authority (EBA) issued its opinion responding to the European Commission’s (Commission) proposed changes to its draft regulatory technical standards (RTS) on the information to be provided to Member State competent authorities when authorising the offer to the public of asset-referenced tokens (ARTs) or the admission to trade them under the Markets in Crypto-Assets Regulation (MiCAR). In substance, the EBA accepts the envisaged changes from the Commission, and in particular with those of them considered as substantive, but at the same time invites the Commission to consider amending the Level 1 text at the next available opportunity, to include the following elements that were set out in the draft RTS, given their importance from a supervisory perspective. Namely, the requirements of a market policy abuse, of an independent third-party audit about the issuer’s proprietary distributed ledger technology that is operated by the issuer or by a third-party operator, and a comprehensive notion of good repute aligned with the rest of the financial sector.

On 27 February 2025, the European Commission adopted the following delegated acts supplementing the Regulation in markets in crypto-assets (MiCA): Commission Delegated Regulation (EU) supplementing MiCA with regard to regulatory technical standards (RTS) specifying records to be kept of all crypto-asset services, activities, orders and transactions undertaken. Article 68(9) of MiCA requires crypto-asset service providers (CASPs) to keep records of all crypto-asset services, activities, orders, and transactions undertaken by them. Those records must be sufficiently detailed to enable competent authorities to fulfil their supervisory tasks and to perform enforcement measures, and in particular to ascertain whether CASPs have complied with all obligations under MiCA, including those with respect to clients or prospective clients and to the integrity of the market. These RTS further specify the records to be kept of all crypto-asset services, activities, orders and transactions undertaken. Commission Delegated Regulation (EU) supplementing MiCA with regard to RTS specifying the requirements for policies and procedures on conflicts of interest for crypto-asset service providers and the details and methodology for the content of disclosures on conflicts of interest. Article 72 of MiCA provides for the requirements for CASPs to implement and maintain effective policies and procedures to identify, prevent, manage and disclose conflicts of interests, as well as to make public those conflicts and the steps taken to mitigate them. More particularly, Article 72(1) of MiCA details the types of conflicts that should be covered by such policies and procedures. These draft RTS further specify the requirements for conflicts of interest policies and procedures and the details and methodology for disclosing those conflicts and steps taken to mitigate them. Commission Delegated Regulation (EU supplementing MiCA as regards RTS specifying the requirements for policies and procedures on conflicts of interest for issuers of asset-referenced tokens. These RTS set out the requirements for policies and procedures on conflicts of interest for issuers of asset-referenced tokens (ARTs) under the MiCAR as well as the details and methodology for the content of the disclosure of the general nature and sources of conflicts of interest and the steps taken to mitigate them. The RTS also contains specific provisions related to personal transactions and provisions related to the remuneration procedures, policies and arrangements. The RTS includes requirements for the arrangements with third parties providing one of the functions as referred in Article 34(5), point (h) of MiCAR as well as for the resources dedicated to the management of conflicts of interest.

On 26 February 2025, the Financial Action task Force (FATF) issued a public consultation seeking input on best practices in mitigating proliferation financing risks. The consultation is intended to help FATF produce a report that will improve country and private sector understanding of current proliferation financing risks. This will cover the evasion techniques used by those evading the targeted financial sanctions detailed in Recommendation 7, which is required by the FATF Standards, as well as other national and supranational sanctions that are not covered by the FATF Standards. The report will focus on providing a comprehensive up-to-date understanding of typologies in complex sanctions evasion schemes relevant to proliferation financing and identifying enforcement challenges and best practices, which helps to inform countries’ proliferation financing risk assessment and risk mitigation. The deadline for comments on the consultation was 21 March 2025.

On 18 February 2025, the Dutch Central Bank (De Nederlandsche Bank, DNB) posted an update on the Instant Payments Regulation (IPR). The IPR entered into force on 8 April 2024 and payment service providers (PSPs) needed to comply with a first set of obligations from 9 January 2025, with more to follow. For PSPs authorised to provide their services in the Netherlands, DNB is responsible for monitoring compliance with the IPR obligations and can also take enforcement action in instances of non-compliance. The IPR aims to promote the use of instant credit transfers (ICTs), both domestically and across borders. In doing so, the IPR aims to make ICTs in euro available to citizens, businesses and institutions holding a payment account in the EU, increasing competition and stimulating development of new payment products throughout the EU. What are the key obligations? The IPR prescribes the following key obligations that PSPs must adhere to: Offering ICTs PSPs must ensure that all payment service users (PSUs) in the EU can place payment orders for and receive ICTs in euros. This applies to all payment accounts that PSPs maintain for their PSUs. This service must be available 24 hours a day, every day. In addition, the cost of an ICT may not exceed the fees charged to the PSUs for other similar types of euro transfers. Verification of the payee PSPs must provide a service ensuring verification of the name of the payee to whom the PSU intends to transfer the credit, free of charge. If the PSU provides both the payment account identifier and the name of the payee, the PSP must provide a service for matching these details, free of charge. This matching service must be offered immediately after the PSU provides the relevant information about the payee and before the PSU is offered the choice to authorise the transfer. Harmonised sanction procedure The IPR includes specific rules for sanctions screening. PSPs must periodically (at least once every calendar day) verify whether their PSUs are subject to targeted financial restrictive measures. Transaction-based screening is no longer permitted. Obligation to submit reports to competent authority PSPs must report to their competent authority (in this case DNB) on (a) the level of charges for credit transfers, ICT and payment accounts and (b) the share of rejections, separately for national and cross-border payment transactions, due to the application of targeted financial restrictive measures. These rejection reports are to be shared every 12 months by the PSP to the competent authority. What are the key deadlines? The deadlines for compliance with the IPR for PSPs in the Netherlands are: Since 9 January 2025: PSPs must be able to receive ICTs in euros and must use a harmonised sanctions screening procedure. By 9 April 2025: PSPs must inform DNB on the level of charges and on rejections during the period starting on 26 October 2022 until the end of preceding calendar year. By 9 October 2025: PSPs must be able to send ICTs and must offer a verification service to ensure the name of the payee corresponds to the IBAN number provided. By 9 April 2027: Non-bank PSPs’ (payment and electronic money institutions) can send and receive ICTs.

On 26 February 2025, the European Commission (Commission) issued a targeted consultation on the review of the functioning of commodity derivatives markets and certain aspects relating to spot energy markets. The consultation seeks feedback on a broad range of issues including: Data aspects relating to commodity derivatives. The ancillary activity exemption. Position management and position reporting. Position limits. Circuit breakers. Other elements stemming from the Draghi report on EU competitiveness. The consultation is launched in conjunction with the Action Plan on Affordable Energy adopted by the Commission on 26 February 2025. Next steps The deadline for comments on the consultation paper is 9 April 2025. The Commission states that outcome of the consultation serves several objectives: It will feed into the MiFID report exercise, with a view to making the EU commodity derivatives markets more efficient and resilient. It will allow the Commission to collect evidence to feed into broader reflections on the wholesale energy and related financial markets that may inform future policy choices in this area where appropriate, this may call for legislative amendments of the relevant legislation, including MiFID and REMIT. The solutions under consideration may in some cases be specifically targeted at certain types of contracts or commodities. It could, for example, be possible to identify specific solutions as regards gas‑related contracts (as opposed to other commodities)