The FCA’s perimeter report has identified 15 areas where the FCA wants to see change from the government, including:
- removing self-certification for FPO purposes and raising the thresholds for the HNWI and Sophisticated Investor exemptions – needed to protect consumers;
- tightening the regime for where trustees need authorisation;
- requesting clarity on the regulatory boundary for sports and non-financial spread betting, which it has long said needs a distinct and specific regulatory framework;
- modernising the payments regulatory framework; and
- its support for the proposed changes to the AR regime.
It also highlights are areas outside its perimeter which it considers may pose consumer risks, notably:
- Annex I firms, which the FCA supervises only for AML purposes and not more widely;
- growing use of general-purpose AI for financial guidance;
- speculative market prediction products;
- SME lending remaining outside the scope of FSMA;
- the continuing lack of clarify on what products constitute insurance products and therefore what insurance business should be regulated; and
- the Government’s decision not to bring investment consultants within FSMA.
Other issues identified in the report include:
- outsourcing and the risks of critical third parties – with the regulators standing ready to oversee CTPs once designated;
- extending the SMCR to cover also e-money and payment firms and FMIs as well as appointed representatives;
- concern over some overseas firms that use the overseas persons exclusion to avoid the need for UK regulation yet have a large UK client base;
- lack of regulation of Northern Irish CMCs
On the positive side, it is pleased that deferred payment credit is soon coming under its oversight, and that progress is being made towards FCA regulation of cryptoasset business. It’s also pleased with the targeted support regime and the ESG ratings regulatory regime going live in 2028.