Our Perimeter Report

Annual reports Published: 20/07/2022 Last updated: 05/04/2024

Our perimeter sets out what we do and don’t regulate. This report describes specific issues we see around it and action we’re taking in response. 

What we regulate

The UK financial services industry carries out a wide range of activities for UK and international clients. Some of this activity is regulated by the FCA and some is not. The Government and Parliament set the limits of our remit, or ‘perimeter’, through legislation.

This report has been updated since the previous publication in March 2023.

Harm linked to the Perimeter

The perimeter’s complexity and changes to financial services

Whether an activity is within our perimeter can be complex. It is made more complex when new products and services are developed, or there are other changes in the way they are used or provided, which were not envisioned when a piece of legislation was written. 

Why harm can occur

Harm can occur due to the development of new products, activities or services that sit outside our perimeter. This is because these will generally not be subject to our rules designed to prevent harm, and we have only limited powers to act when harm occurs outside our perimeter. 

Consumers may suffer harm if they wrongly believe they are dealing with an authorised firm or individual carrying out a regulated activity or wrongly think they will be able to get redress or compensation through the Financial Ombudsman or the Financial Services Compensation Scheme (FSCS). The InvestSmart campaign is designed to create confident consumers, helping consumers understand how to invest and make better informed decisions that are suited to their needs. 

Harm could also occur if an unauthorised person pretends to be authorised, or if an authorised person conducts a regulated activity without the relevant permission from us to do so. Both are illegal. Consumers are at more risk of harm because that firm or individual has not gone through our Authorisations Gateway and so has avoided our scrutiny.


If a firm hasn’t resolved a complaint, consumers may be able to get redress by taking the complaint to the Financial Ombudsman Service, or potentially claim from the FSCS if a firm fails.

However, consumers cannot always use these routes to get redress because not all regulated activities are protected by the Financial Ombudsman or the FSCS.  

To help consumers understand how they may be able to access redress, we require most firms to provide customers with information on how they can make a complaint and information on the Financial Ombudsman, if the customer is eligible.

Firms are generally also required to let their customers know when compensation from the FSCS might be available if the firm cannot meet its liabilities.   

The Financial Ombudsman’s jurisdiction covers complaints against respondents (including firms) from their carrying on of regulated activities and other activities which are listed at DISP 2.3.1R within the FCA Handbook. There are limits on the amount of redress the Financial Ombudsman can award.  

The FSCS is the compensation scheme for customers of UK-authorised financial services firms that are, or are likely to be, unable to meet claims against them. FSCS cover applies to protected claims involving an activity which is regulated. But it does not apply to all regulated activities. For example, it does not cover all consumer credit activities. There are also limits to the amount of compensation the FSCS can pay. 

Our Business Plan summarises the outcomes we want to achieve to improve the redress framework and how we will measure progress. 

Our general approach to the Perimeter

We take steps to help reduce harm linked to our perimeter. This includes harm from firms or individuals carrying out regulated activities without authorisation or the correct permissions, or from general confusion about where the perimeter sits and what it means. For example, we:

  • monitor and assess the potential for harm linked to the perimeter as part of the normal course of our regulatory activities
  • support discussion about the perimeter amongst political stakeholders and highlight where we see gaps in the legislation and the potential for harm
  • take action to reduce harm outside our perimeter where we can
  • share our insights and information with our partner agencies
  • issue warnings, run targeted campaigns, and work to improve consumers’ understanding and enable them to make effective financial decisions
  • analyse data and intelligence, and take action against firms or individuals who illegally carry out regulated activities

Whether or not consumers are dealing with an authorised person or a regulated activity, they will sometimes suffer loss. This could be because of the way the market performs and the risks consumers have taken, or because of dishonesty or misconduct by authorised or unauthorised persons. 

We cannot stop all consumers from suffering harm. And we do not always have the power to act. As in all our work, we prioritise issues where we can have the greatest impact. Our remit is large and growing, so we need to make complex trade-offs when deciding what to monitor or where to act. 

Our powers to act against unregulated activities

Generally speaking, the FCA does not have powers to act in relation to non-authorised firms conducting activities which do not require authorisation by us. 

We do have powers to make rules and impose obligations in relation to the activities of FCA-authorised firms, including their non-regulated activities where relevant to our statutory objectives. As a recent example, our new rules under the Consumer Duty (which came into force on 31 July 2023) include specific obligations on the design of financial products and services for retail customers and ongoing support for them. These activities typically do not amount, in themselves, to regulated activities but are connected to regulated activities and the Consumer Duty applies to them.

Many of our rules pertain to how an authorised firm conducts its business in a more general way – for example, prudential requirements, our systems and controls rules, including the Senior Managers & Certification Regime (SM&CR), and our rules on complaints handling. 

We can use our powers under general consumer protection legislation for both regulated and unregulated activities. We have powers under the Consumer Rights Act 2015 and the Unfair Terms in Consumer Contracts Regulations 1999 to take action if we consider a term in a consumer contract is likely to be unfair or insufficiently transparent. We used these powers when we took action to have contracts used by buy-now pay-later (BNPL) lenders changed and agreed refunds for affected borrowers.

We can also use our powers to enforce other consumer protection legislation such as the Consumer Protection from Unfair Trading Regulations 2008. This can help us to tackle unfair commercial practices, even where our rules do not apply. 

Where we might act against unregulated activities

Financial services markets are dynamic and always changing and, given our large and growing remit, we need to prioritise where we take action. Given our limited powers to act against unregulated activities, defining where and how we might act against the harm they cause is not simple. 

We are more likely to act where the unregulated activity: 

  • is illegal or fraudulent 
  • has the potential to undermine confidence in the UK financial system 
  • is closely linked to, or may affect, a regulated activity 

Actions we take to monitor and reduce harm

As well as taking direct action where we can against harm caused by unregulated activities, we take various additional steps to monitor and prevent harm caused by these or otherwise linked to our perimeter. 

Working with our partner agencies

We work closely with our partner agencies to prevent harm and support consumers if things go wrong. Our partner agencies include:

We proactively communicate and share information, particularly when our partners have the power to act and we don’t, or when they are better placed to do so.

Supporting dialogue on the perimeter

As well as publishing information on our perimeter, we do other work to help others understand the issues around the perimeter:

  • Our Handbook includes guidance on the perimeter, in the Perimeter guidance manual.
  • In our supervision of firms, we discuss their activities and where they sit in relation to the perimeter.
  • We promote innovation in consumers’ interests. Through our Innovation Hub, we help regulated and unregulated firms understand whether or not their planned activities, products, services and business models come within our regulation.
  • We horizon-scan future market developments and work with the Treasury and the Bank of England to encourage healthy innovation while maintaining appropriate safeguards.
  • We take appropriate enforcement action against breaches of the perimeter and publish details of these cases to foster understanding and act as a deterrent.

Firms and individuals are required to meet our regulatory requirements. We investigate, and take action where we can, to tackle harm where we suspect serious misconduct, or if we suspect unauthorised firms and individuals are carrying out regulated activities. 

We also highlight where we see gaps in the legislation and discuss this with the Treasury and the Government. We contribute to the Bank’s Financial Policy Committee’s work to assess potential financial stability risks involving the regulatory perimeter. However, the focus of our own work is on upholding our statutory objectives, including protecting consumers.

Changing the perimeter can take time and is not always an effective way to prevent harm. Changes to the perimeter which increase our regulatory responsibilities also have implications for our resources and the fees we levy on the industry.

Addressing fraud risks outside the perimeter of regulation but involving authorised firms

The FCA has delivered a number of initiatives to address fraud and misconduct risks that are outside the perimeter of regulation but involve authorised firms. 


We have rolled out a holistic approach to higher-risk firms applying for FCA authorisation. Our framework sets clear expectations on how to assess any unregulated business these firms undertake and implements mandatory training for our new joiners.

We apply more scrutiny of a firm’s financial information when we receive an application for authorisation and a new framework for financial checks. 

Our review of a firm’s financial information is not solely designed to spot fraud. More broadly, it ensures that the applicant firm meets our threshold condition on sufficient financial resources. But the overall assessment supports case officers to spot irregularities. In doing so, we also rely on the work of others who certify financial information, such as accountants and auditors.  

Where we identify concerns with a firm, we take a more assertive approach. We either encourage the firm to withdraw and improve their application (where it is not ready, willing or organised) or proceed to a refusal if we have more significant concerns.

Identifying connected entities and individuals

We have a department that brings together specialists from the FCA to deliver an integrated approach to tackling scams, breaches of the perimeter and non-compliant financial promotions. This department is called the Financial Promotion and Enforcement Taskforce (FPET)and went live in October 2021. FPET is a joint taskforce between Supervision and Enforcement and has blended the skills and experience across these teams, leading to more and earlier interventions.

On 14 February 2024, we published our Financial promotions data 2023 – this report analysed the data for the action that FPET took from 1 January 2023 to 31 December 2023. We continue to work with partner agencies where appropriate.

Our challenges

We also highlight some challenges we face, while continuing to take action to reduce harm.

Collecting intelligence and data on unregulated activities

Our ability to monitor harm caused by unregulated activities and to collect data on these activities is limited – especially if the firms are not authorised. This makes it more difficult to identify harm and to conduct analysis.

We do not routinely collect significant data on unregulated activities. Firms must comply with our regulatory reporting requirements. These typically focus on activities that fall within our perimeter.

Where we do receive data or intelligence on unregulated activities, for example from other agencies or from consumers, this is generally after harm has happened.

We are investing in our people, technology and capabilities so we can find and stop harm quicker but will still face significant challenges when unregulated activities are the cause.

Preventing harm

Firms and individuals who deliberately exploit consumers will always look for new ways to do so. When we take action to prevent misconduct in one product or activity within or outside our perimeter, these often-well-resourced players frequently seek out new opportunities in other products or activities. We aim to reduce this ‘waterbed effect’ by sharing intelligence with other agencies and issuing warnings on our website. 

We try to provide clarity on the perimeter where we can and to enable consumers to make informed financial decisions. However, the complexity of the perimeter, and continuous changes in financial services, products and services mean we will never be able to remove all uncertainty and ambiguity.

In the following sections, we provide detail on specific topics involving our perimeter to provide greater clarity on our position and our work.

Firm business models

Firms are only required to be authorised if they undertake regulated activities under the RAO or other relevant legislation. Firms that we authorise for regulated activities can also undertake unregulated financial services activities. Where we think that bringing unregulated activities into our remit is likely to prevent harm and lead to better outcomes, we work with the Government to do so. In this section, we cover topics involving firms’ business models and the structures they choose to adopt.

Unregulated debt advice lead generators

This issue was first publicly raised in September 2020.

Lead generators are a major point of entry to the individual voluntary arrangements (IVA) and Protected Trust Deed (PTD) market. They pass leads to FCA-authorised debt packager firms and to Insolvency Practitioners regulated by Recognised Professional Bodies, overseen by the Insolvency Service (IS). 

With the cost of living increasing financial pressure on consumers, it is more important than ever that the path to debt help works well. In June 2023, we introduced new rules which ban debt packager firms from receiving payment from debt solution providers.

Alongside this, we also introduced new guidance to clarify when lead generators may need to be authorised by us. We continue to work closely with regulatory partners to ensure the market serves customers well and take action to address harm.

Appointed Representatives

This issue was first publicly raised in September 2020.

An appointed representative (AR) is a firm or person who carries on regulated activity under the responsibility of an authorised firm. This authorised firm is known as the AR’s ‘principal’ and is responsible for the AR’s activities, including its compliance with our rules. Firms and individuals may want to be an AR for a range of reasons, including being able to undertake certain regulated activities without having to become FCA authorised in their own right.

The AR regime is a long-standing feature of the UK’s legislative regulatory architecture. It was created primarily to allow self-employed representatives to engage in regulated activities without having to be authorised. In particular, it allowed insurers and other product providers to distribute products through self-employed sales agents by appointing them as ARs. 

Over time, the way in which the AR regime is engaged has evolved. Today, the regime is used by a diverse range of business models such as regulatory hosts and networks. The scope of business which can be carried on within the AR regime has expanded with time. Principals and their ARs now offer a wide range of products and services across many different sectors, for example, from retail and general insurance to investment management.

Where these models are well run, we believe they can bring benefits such as wider consumer access and greater innovation. However, we have identified risks of harm to consumers when principals do not adequately oversee the activities of their ARs. Our CP (21/34) highlighted, that on average, principals generate 50% to 400% more complaints and supervisory cases than other directly authorised firms.

In our 2022 to 2025 Strategy and Business Plan, we committed to a new and extensive programme of work on the AR regime, including:

  • consulting on changes to the AR regime
  • greater engagement with, and scrutiny of, firms as they appoint ARs, both for new applicants for authorisation and already-authorised firms
  • targeted supervision of principal firms across the whole financial services sector, using improved data and analytical tools to focus our work

Our 2022/23 Annual Report sets out the steps we have taken so far to tackle harm from the regime. Notably, in August 2022 we published new rules and guidance to strengthen the AR regime (PS22/11). The new rules and guidance came into force on 8 December 2022. The changes clarify and strengthen the expectations of principal firms’ oversight of ARs, including ensuring they have adequate systems, controls and resources.

We also supported the Treasury’s work and its Call for Evidence, which closed on 3 March 2022, to assess whether wider legislative changes are needed. We will continue this important work with the Treasury and would welcome progress on next steps.

Outsourcing / third party service providers

This issue was first publicly raised in September 2020.

Firms increasingly depend on unregulated third-party service providers to deliver their important business services to consumers and markets. During the period between 2020-2022, 26% of operational incidents reported to us involved third parties as the top root cause. 

Where many firms rely on the same third party, such as cloud service providers, the potential harm if these providers fail increases. This can present potential systemic risks to the UK financial sector, such as wide-reaching harm to consumers and threatening financial stability. This raises questions around whether financial services regulators have sufficient regulatory oversight of these services to manage the ‘concentration risk’. 

Current requirements and guidance make regulated firms responsible for identifying and managing their third-party risks. Importantly, firms cannot delegate regulatory responsibility for the process, service or activity they have outsourced. 

However, we recognise the limitations of the current regulatory framework in managing these potential systemic risks. So, the Financial Services and Markets Act 2023 grants the supervisory authorities new powers over providers of critical services to the finance sector.

In December 2023, we published a joint consultation paper with the PRA and Bank (CP23/30) to consult on potential rules and guidance relating to providers of critical third party services subject to future designation by the Treasury using new powers in the Financial Services and Markets Act 2023. 

Our proposed measures include:

  • an approach to identify and designate certain third-party service providers as critical
  • a set of Operational Risk and Resilience Requirements
  • resilience testing, incident notification and information gathering requirements 

These potential measures would complement, but not replace, the existing responsibilities of firms to manage the risks from their outsourcing arrangements under our Operational Resilience and outsourcing rules and guidance.

Deposit aggregators

This issue was first publicly raised in April 2021.

Deposit aggregators (also known as savings platforms or savings marketplaces) are firms that provide intermediary services to retail consumers with savings accounts. They can offer a convenient service for customers to spread deposits across different banks and building societies, to get the best interest rates and potentially maximise FSCS protection for high balances under the deposit protection scheme (PRA's rules). Deposit aggregation is a growing market.

Deposit aggregation is not a regulated activity under FSMA, although it can involve activities or services that are within our perimeter, in particular payment services. Most, but not all, deposit aggregators are within our perimeter because they are regulated for these other activities or services. We have no remit to supervise unregulated deposit aggregators. 

Deposit aggregation offers benefits to consumers, but there are also risks of consumer harm. For example customers who are also investing directly with banks or building societies may unknowingly breach the FSCS limit because they do not realise different trading names are part of the same group. There could also be liquidity risks to banks and building societies accepting deposits from deposit aggregators, for example, where there is a concentration of deposits from a small number of aggregators who might move them at the same time.

In April 2021, the FCA and PRA jointly wrote a Dear CEO letter to all banks and building societies to highlight the risks from deposit aggregation and the actions needed to mitigate them. We reminded them of their responsibilities for the content of and conduct around financial promotions for savings accounts where a deposit aggregator advertises products as their agent. 

We have updated the deposit aggregators entry in the A-Z of financial terms to explain that deposit aggregators are not necessarily regulated by us and that, even where we regulate them for other activities or services, protections will not necessarily apply to the deposit aggregation service they offer. The entry explains what customers should ask the deposit aggregator and how customers can check on our website the status of any firm regulated by us and the regulated activities it is authorised to do.
We expect banks and building societies to continue to address the issues set out in our Dear CEO letter. This includes compliance with applicable rules on relevant financial promotions, including to ensure that any claims about FSCS protections are fair, clear, and not misleading.

General Insurance perimeter

This issue was first publicly raised in June 2019.

The RAO does not provide a complete definition of insurance. This means court decisions about whether particular contracts amount to insurance help determine where our remit applies. 

There has sometimes been uncertainty as to whether certain contracts should be classed as insurance. Some firms have structured their products to take them outside our remit, but we consider those products should properly be regarded as insurance. We have identified concerns in two areas:

  • Insurance requires a provider to undertake to pay money or provide a corresponding benefit to a recipient. In some contracts, the provider claims to have absolute discretion not to pay out. But this may involve circumstances where we consider the discretion to have no real content or to be an unfair term. In these cases, our view is that the contracts should properly be categorised as insurance.
  • We have also seen firms claim that their warranties are mainly service contracts providing repair services, with a minor indemnity element that pays benefits if the product is lost or damaged. We believe many of these contracts artificially describe the repair services and, on more detailed analysis, are really contracts of insurance. 

The FCA is considering, alongside other priorities, whether it would help to consult on guidance setting out the FCA’s approach in this area.

Overseas insurers and what amounts to carrying on insurance business in the UK

Following the UK’s exit from the European Union and the end of the temporary permission regime we have received questions on what amounts to doing insurance business in the UK. The FCA takes into account the case law setting out the broad tests to apply in assessing whether a firm is 'effecting' or 'carrying out' insurance contracts in the UK.

We recognise that there are different views in the market as to what may amount to doing insurance business in the UK, and that each case needs to be assessed on its own particular facts. Ultimately it is for a UK court to decide. However, given our role in relation to the perimeter, the FCA is keeping under review the need for guidance to set out the FCA’s approach in this area.

Use of group policies

We have seen instances of group general insurance policies being used outside of their normal context (e.g. employment or other genuine affinity group arrangements) by unauthorised firms whose commercial business includes taking out a group policy. They then offer consumers the benefit of the insurance cover provided by the group policy, structured in a way where consumers do not obtain rights under the contract.

We are concerned that these arrangements may be being used inappropriately in some circumstances, with the effect that the firms concerned effectively avoid regulation and so consumers do not get the best outcome. The FCA is considering, alongside other priorities, whether it would help to consult on guidance setting out the FCA’s approach in this area.

Money Laundering Regulations (MLR)

This issue was first publicly raised in July 2021.

Under the Money Laundering Regulations (MLRs) we are responsible for supervising two groups of firms solely for their compliance with the MLRs, these are so-called Annex 1 Financial Institutions (FIs) and certain cryptoasset businesses. 

As part of a package of changes to the MLRs in July 2022, the Government made some amendments to our powers and remit for cryptoasset firms and for Annex 1 FIs. 

For Annex 1 FIs we are undertaking a programme of supervisory activity and these powers will allow us to address, as necessary, any failings that require either supervisory or enforcement action. 

A change of control regime for cryptoasset businesses under the MLRs was also introduced. This means that, from 11 August 2022, any person who decides to acquire 25% or more control of an FCA registered cryptoasset firm must receive prior FCA approval before completing the transaction. It is a criminal offence to acquire control of an FCA-registered cryptoasset firm without FCA approval. 

We have previously issued 2 consumer-focussed warnings relating to specific firms (Binance, Coinburp) and 3 notices to firms reminding them about their obligations including under sanctions and MLRs.


Ensuring consumer credit markets work well and making payments safe and accessible are in line with our commitment to putting consumers needs first. Various aspects of our perimeter involve lending and credit.

Deferred Payment Credit (Buy Now Pay Later)

The issue was first publicly raised in February 2021.

Over the last few years, we have seen the significant growth of unregulated buy-now pay-later products (which we refer to as ‘Deferred Payment Credit’ (DPC)), predominantly supporting digital retail sales.

The products often take the form of either deferred payment or short-term instalment loans, commonly providing credit for lower value goods. 
The growth in DPC has in part been due to the popularity of online shopping, particularly during the pandemic, and with more flexible payment options becoming increasingly popular with consumers. 

DPC relies upon an exemption in the RAO that applies where, among other conditions, the credit is provided without interest or charges and is repayable within 12 months by no more than 12 payments. This is a longstanding exemption and was originally provided for in regulations under the Consumer Credit Act 1974. 

In February 2021, the Woolard Review recommended that unregulated DPC products be brought into the regulatory perimeter to protect consumers.

We, and the Treasury, agreed with the report’s findings. The Treasury announced its intention to bring these products into regulation in a proportionate way. 

Following a consultation paper in October 2021, setting out potential options on the scope and form of regulation for DPC, the Treasury published a consultation in February 2023 on the draft legislation.

Our ability to consult on conduct standards for the sector and ultimately to enact changes to our Handbook is contingent upon Treasury decisions.

In the meantime, we have been designing a framework to assess firms applying for authorisation and a supervisory strategy for when these firms fall under our remit. 

In advance of regulation, we will act where we see harm using our existing powers and our non-FSMA consumer protection powers which can apply to unauthorised firms where we see poor practices.

We can use our powers under the Consumer Rights Act 2015 to intervene where we have concerns that terms in the consumer contracts of DPC providers may be unfair and / or not transparent.

In February 2022, we announced that we had secured changes to potentially unfair and unclear terms in the contracts of Clearpay, Klarna, Laybuy and Openpay, and in October 2023 we secured changes to the contract terms of QVC and Paypal. As a result of our work, the firms made terms on issues like contract cancellations and continuous payment authorities fairer and easier to understand.

As consumers across the UK face the rising cost of living and experience financial difficulties, we have issued a letter to firms in the sector (both regulated lenders offering exempt DPC products and unauthorised firms offering exempt DPC products) setting out our expectations around providing their customers with appropriate care and support. 

We strongly encouraged unauthorised firms to take positive action now and set out in our Dear CEO Letter to regulated lenders how we expect them to treat borrowers in financial difficulty. We reinforced our messages at a roundtable with unauthorised firms offering exempt DPC products in July 2022.

Some firms offering DPC products are regulated by us for other activities, and this enables us to intervene if we see poor conduct. We have already acted on concerns over financial promotions which resulted in the firms withdrawing certain marketing material. We discussed our concerns with the sector at a roundtable held in July 2022. In August 2022, we published a Dear CEO letter setting out concerns identified with DPC financial promotions. 

The letter reminded firms involved in communicating, or approving, financial promotions for exempt credit agreements of their obligations when doing so. We are proactively monitoring the market to assess compliance. 

Employer Salary Advance Schemes

This issue was first publicly raised in July 2020.

Employer Salary Advance Schemes (ESAS) allow employees to access, usually for a fee, some of their salary before their regular payday. These schemes are usually administered by specialist scheme operators who promote them to a variety of both public and private sector employers. 

When used in the right way, ESAS can be a convenient way for employees to deal with unforeseen expenses and occasional short term cash flow issues. The schemes we have looked at from some of the main providers fall outside of credit regulation. However, there are a variety of ways the schemes could be structured and so this might not always be the case. 

ESAS are often promoted as an alternative to high-cost credit, although our understanding is that this remains a very small market. However, growing demand for the product could increase given the rising cost of living, particularly from those consumers/employees that may have limited credit options. 

The Woolard Review’s report of change and innovation in the unsecured credit market concluded that, given the size and scale of the market, it would currently be disproportionate to introduce a bespoke regulatory regime. However, it also recommended that this should be kept under review in the light of any emerging issues. We have not seen any evidence to date of harm emerging and consider that there are currently insufficient grounds to bring the product inside the perimeter. 

We are also encouraged that the main ESAS providers launched a Code of Practice in September 2023, in accordance with one of the Woolard Review recommendations.

SME lending

Small and medium sized enterprises (SME) lending is a longstanding perimeter issue, as business lending is generally only a regulated activity where both the loan is up to £25,000, and the borrower is either a sole trader or a ‘relevant recipient of credit’ (RRC). 

Consumer credit regulation does not currently apply to lending to limited companies, limited liability partnerships and partnerships consisting of more than 3 persons. The level of regulatory protection that an SME will receive when lending is therefore defined by the legal entity type that the business owner(s) has chosen to use, combined with the loan amount. Lending or hire of a value over £25,000 for business purposes is also out of scope of the CCA. 

In its first stage consultation on Reform of the Consumer Credit Act (CCA) the Treasury asked respondents to comment on whether the business lending scope of the CCA should be changed. We will be working alongside the Government through their reform process, which it expects will take a number of years. There will likely be a second stage consultation  in 2024 to invite further comment from stakeholders on more developed policy positions.

The question of whether limited company borrowers should benefit from the consumer protections provided by the rules and guidance in our Consumer Credit Sourcebook was raised in a recent super-complaint.

We are committed to the fair treatment of SMEs. In 2021/22 we carried out work to monitor how firms treat SME borrowers in financial difficulty or arrears, and if they are receiving appropriate forbearance where they are entitled to protection under our rules. Our supervisory work concluded that protections for SMEs in financial difficulty are broadly being delivered overall, although we communicated that there were important steps that some firms needed to take to ensure all customers are treated fairly and receiving appropriate protection. 

Consumer investments

Creating the right environment for consumers to invest with confidence, understanding the risks they are taking and with appropriate regulatory protections continues to be a priority for us.

Investment Scams

This issue was first publicly raised in August 2017.

Some of the most serious harm we see continues to come from investment scams from businesses operating without FCA/PRA authorisation. Between January 2023 to December 2023, we received 24,865 reports of potential unauthorised business. We published 2,285 consumer alerts about unauthorised firms or individuals – an increase of 21% from 2022.

The economic context remains challenging. Global inflationary pressures have continued and household real incomes have fallen as a result, driving increased costs of living. This could encourage some consumers to seek higher risk investments, in an effort to achieve returns which exceed inflation, and so risk falling victim to scams. Enquiries to our consumer helpline about potential scams have increased significantly since 2020. This trend continued into 2022/2023. 

Our existing work focuses on protecting consumers through assertive supervision and consumer communications to help them avoid scams. Our ScamSmart and InvestSmart campaigns and publication of alerts seek to warn consumers about scams or the activity of unauthorised firms and help them make better investment decisions. 

We also take enforcement action against firms and individuals that are not authorised or exempt under FSMA, but who carry on regulated activities, in breach of the legislation and/or who disregard restrictions on financial promotions. In 2022/23, we obtained just under £5m in consumer redress for unauthorised investment business.

Unregulated Collective Investment Schemes

This issue was first publicly raised in April 2016.

A Collective Investment Scheme (CIS) – sometimes known as a ‘pooled investment’ – is a type of fund that usually has contributions from several people. Another type of pooled investment is an ‘alternative investment fund’ (AIF). There is a significant overlap between CISs and AIFs. The fund manager of a CIS/AIF will put investors’ money into one or more types of asset, such as stocks, bonds, property or other types of asset, including cryptoassets. 

A CIS/AIF may be an authorised UK scheme, or a ‘recognised’ scheme from other countries. If a CIS/AIF is not authorised or recognised, then it is considered an Unregulated Collective Investment Scheme (UCIS). While we do not directly supervise the UCIS themselves, we regulate the promotion of these schemes in the UK, how UK firms can advise on, or sell, them and, generally, the fund managers who operate them. 

UCIS are high-risk investments and cannot be promoted to the general public in the UK. Despite this, we have seen evidence that UCIS are being unlawfully promoted to ordinary members of the public through a wide range of investments, including investments in property developments, hotel-room schemes, care homes and certain types of crypto-staking products. 

Where this happens, the individuals and firms involved are breaking our rules and other laws. In some cases, these UCIS may involve fraud or be scams. Firms thinking of establishing these types of investment schemes, or offering them to the general public, need to consider whether they meet the definition of a CIS/AIF. 

We have taken action, including successful prosecutions, against firms and individuals involved in promoting and selling UCIS to the general public. We continue to take action and, where fraud or scams are involved, we work closely with other law enforcement agencies such as the Serious Fraud Office.

Overseas Funds Regime

This issue was first publicly raised in October 2021.

Many regulated CISs marketed to retail investors in the UK are domiciled in European Economic Area (EEA) jurisdictions. This is a legacy of the UK’s membership of the European Union. In the EEA, a particular type of CIS called UCITS, which are subject to a minimum set of consumer protection rules, can be authorised in one EEA state and marketed in other EEA states with few restrictions.

Following the UK’s exit from the European Union, these marketing permissions, known as the EEA UCITS Directive passport, no longer cover the marketing in the UK of UCITS domiciled in the EEA. 

To avoid a cliff edge, 9,200+ EEA UCITS which are marketed in the UK were able to take advantage of a Temporary Marketing Permission Regime (TMPR). This allows them to continue to be marketed in the UK on the same basis as before the UK’s exit from the EU.

The Government has legislated for a new marketing regime called the Overseas Funds Regime (OFR). This will allow categories of non-UK CISs to be marketed in the UK, including to retail investors, if the Treasury determines an overseas jurisdiction as equivalent, and we grant the fund recognition. The Government has recently announced that it has found EEA UCITS equivalent, and that it intends to extend the Temporary Marketing Permissions regime to 2026, to allow funds more time to transition to the OFR.

We have been working closely with the Treasury in support of the new Overseas Funds Regime to help ensure that it is implemented in a way that ensures the best outcomes for investors in the UK.

Under the Overseas Funds regime, the FCA may be asked to provide input to inform the Treasury's decision making – including whether the protection given to investors in an overseas jurisdiction’s funds is comparable to our rules for UK authorised CISs. In providing such input, we generally take into account the commonality of regulatory outcomes and the strength of supervisory cooperation.

We have consulted on an overall framework for registering funds under the OFR. As the Treasury makes a determination on equivalence, we will consider whether any additional rules or regulatory changes are required to our Handbook to ensure that markets work well, with integrity and protections for consumers.

Marketing of high-risk investments to retail consumers

This issue was first publicly raised in June 2019.

We have limited powers over many issuers of high-risk investments, as issuing an investment product often does not involve carrying out a regulated activity. This means that we cannot generally impose requirements on the issuers themselves as they are often not authorised persons. 

However, marketing these investments is generally subject to the financial promotion regime, unless an exemption applies. Financial promotions are often consumers’ first contact with an investment offer and so the financial promotion regime is key in ensuring that only appropriate investments are mass-marketed to ordinary retail consumers. Our rules are based on the level of risk in what is being promoted and the characteristics of the audience. 

Where the risks are higher, or less clear, marketing restrictions are in place to protect consumers. This also means that it is vital that the legislative exemptions from these restrictions, which allow unauthorised persons to communicate promotions without the involvement of an authorised firm and the application of FCA rules, are suitable and appropriate for consumers.

Where we identify harm to consumers from particular products, we may take steps to restrict promotions. For example, in January 2021, we permanently banned the mass-marketing of Speculative Illiquid Securities, such as speculative mini-bonds, to retail investors

In August 2022, we published a Policy Statement on strengthening our financial promotion rules for high-risk investments. 

These new rules are designed to ensure that consumers understand the risks before investing in high-risk products, and that firms marketing and approving financial promotions operate to high standards. The new risk warnings for high-risk investments came into force on 1 December 2022.

The rest of the new rules, including new ‘positive frictions’ within the consumer journey and a ban on incentives to invest, came into force on 1 February 2023. These rules were extended to promotions of qualifying cryptoassets when these were brought within the scope of the financial promotion regime in October 2023.

Exemptions in the Financial Promotion Order

This issue was first publicly raised in September 2020.

Unauthorised persons still frequently rely on exemptions in the Financial Promotion Order (FPO) which allow certain high-risk investments to be marketed to, among others, ‘high net worth’ and ‘sophisticated’ investors (‘the exemptions’).

Promotions made under these exemptions do not have to comply with our financial promotion rules, including the requirement to be clear, fair and not misleading, and our mass-marketing bans. 

Strengthening our financial promotion rules has seen more unauthorised issuers using, or purporting to use, the exemptions to target ordinary consumers with high-risk investments and scams outside of our financial promotion perimeter. So it is important that exemptions that take communications outside of our financial promotion requirements are designed appropriately.

The Treasury consulted on reforming the exemptions for promoting to ‘high net worth’ and ‘sophisticated’ investors in December 2021, and responded to its consultation in November 2023.

On 31 January 2024, changes to the exemptions came into force which included: increasing the financial thresholds in the eligibility criteria for consumers to self-certify as a ‘high net worth’ or ‘sophisticated’ investor; removing one of the criteria to ‘self-certify’ as a ‘sophisticated’ investor (to have made more than one investment in an unlisted company in the previous two years); and updating the statements that consumers need to sign to increase investor engagement.

However, in March 2024, the Treasury announced the reversal of some of the reforms in response to concerns raised by industry about the impact of the changes on access to investment opportunities. This included reinstating the removed criterion to self-certify as a ‘sophisticated’ investor and reverting the financial thresholds in the eligibility criteria to the pre-31 January levels.

We considered that the reforms that took effect in January were needed to reflect significant changes in the investment environment, including inflation, since the exemptions were introduced in 2001/2005. 

So following reversal of these reforms, one way for consumers to self-certify as a ‘sophisticated’ investor is once again to confirm that they have made more than one investment in an unlisted company in the previous two years.

In the past, this would have required the consumer to have some private business experience. However, with the introduction of investment-based crowdfunding, ordinary consumers can now easily meet this criterion. For example, our Financial Lives Survey (FLS), conducted in 2022, shows that at least 1.6 million consumers hold investments in unlisted companies. We supported removing this criterion due to our concern that it is no longer a reasonable reflection of expertise.

It is also now again the case that, to self-certify as a ‘high net worth’ investor, a consumer will need an annual income of £100k or more, or £250k or more in net assets excluding their primary residence and pension assets. While there are not direct comparisons to the UK exemptions, other jurisdictions have attempted to define ‘high net worth’ investor exemptions.

The UK threshold has returned to being significantly lower than the thresholds which other comparable jurisdictions use. We supported the increase in financial thresholds to ensure investors exposed to promotions for investments which are generally higher risk are better able to withstand losses.

Due to these concerns, we do not agree with the Government’s reversal of these reforms. 

In their 2021/22 consultation, the Treasury also proposed introducing a requirement for firms to check that consumers meet the relevant criteria to self-certify as ‘high net worth’ or ‘sophisticated’. However, this was not taken forward in their final reforms due to concerns about the impact on the ability of small and medium-sized enterprises to raise finance.

While we recognise these concerns raised by respondents to Treasury’s consultation, we have seen evidence of unauthorised persons abusing these exemptions by coaching ordinary consumers to self-certify. For this reason, we remained concerned that investors who do not meet these tests are being ‘pushed’ through them, often by unregulated persons. 

Our behavioural testing found that even our most effective changes to the declaration forms used in our own rules still resulted in more than twice the proportion of consumers self-certifying as high net worth or sophisticated compared with those who claimed they met the relevant criteria.

Our 2022 FLS also found that only 1 in 5 adults holding high-risk investment products that fall under our marketing rules could recall being asked if they were a high-net-worth or sophisticated investor the last time they invested. This suggests that many consumers pass through the self-certification process without being aware of its significance.

While we welcomed the Treasury’s consultation on reforming these exemptions, our position remains that self-certification should be removed entirely, and the threshold to be considered ‘high-net worth’ should be raised significantly. Firms should have greater responsibility to verify that individuals meet the criteria to be 'high net worth' or 'sophisticated'.

Leaving this aspect of the legislation unchanged undermines other measures to strengthen the financial promotions regime, and will continue to lead to significant consumer harm that we are unable to reduce. We are not aware of any other jurisdiction that allows firms to use exemptions purely based on investors’ self-certification.

The Treasury has committed to further work to review the scope of the exemptions and we will continue to work with them on possible ways to strengthen the regime as a whole. We will continue to raise any evidence of ongoing consumer harm with the Treasury on these issues.

New regulatory gateway for firms who approve financial promotions for unauthorised persons (s21 Gateway)

This issue was first publicly raised in June 2019.

Until recently, any authorised person could generally approve the financial promotions of an unauthorised person. Authorised persons approving financial promotions (as a ‘s21 approver’), are responsible for ensuring the promotion complies with FCA financial promotion rules.

This means that s21 approvers play a pivotal role in ensuring that financial promotions communicated by unauthorised persons accurately represent the product or service being promoted. This is particularly relevant to matters that are relevant to helping consumers make informed decisions. 

We have seen previous instances of firms approving financial promotions without properly understanding the product or service and so being unable to properly ensure that the promotion meets our standards.

The Financial Services and Markets Act 2023 included provisions to amend section 21 of FSMA, to create a regime that requires authorised persons to seek permission from the FCA to approve financial promotions for unauthorised persons (the ‘s21 Gateway’).

All firms that want to approve financial promotions now need to apply to us for permission to do so (subject to certain exemptions). This regime came fully into force on 7 February 2024.

Applicants are assessed at the Gateway to determine whether they have the necessary competence and expertise to act as a s21 approver. Firms that approve financial promotions in scope of the gateway must also submit regular reports to us about their approval activity.

The s21 Gateway means we can better understand, monitor and record those firms approving financial promotions in this way, which we were not previously able to do effectively. 

The s21 Gateway does not apply to firms when approving their own promotions, those of group members, or those of their Appointed Representatives (where the financial promotions relate to the regulated activities they are permitted to undertake).

We will keep s21 approval activity under close review, including by using the reports that approving firms submit to us. This will include assessing whether firms are seeking to inappropriately exploit the exemptions to avoid applying to the s21 Gateway.

Marketing of CFDs and other high-risk derivative products

This issue was first publicly raised in October 2021.

There are problems with the marketing of contracts for difference (CFDs) and other high-risk derivative products to retail clients. Our concerns include firms encouraging clients to trade with entities in third country jurisdictions rather than their UK business. We are also concerned about the use of introducers and affiliates who may be carrying out unregulated activities.

We know that some providers of retail derivatives (CFDs and Futures) are encouraging retail clients to trade with firms in third country jurisdictions, by using comparison tables to highlight that retail consumers can get higher leverage through third country group entities. This effectively circumvents the permanent restrictions on maximum leverage we brought in from 2019 to reduce retail consumer losses from these high-risk products.

Some firms also don’t highlight other protections that retail consumers may lose by transferring their account overseas, such as the loss of negative balance protections. 

We will continue to focus on firms’ financial promotions and marketing activities in our supervision work.

Technological changes

Rapid technological change is transforming financial services. We target our action to foster healthy, innovative markets, where developments in technology can deliver better outcomes for consumers. In some cases, technological developments lead to new products and services, or types of harm, that weren’t envisaged when legislation setting our perimeter was written.

Online harms

This issue was first publicly raised in June 2019.

Over recent years, rises in fraud cases in the UK have been increasingly influenced by scammers’ use of online platforms, including fraudulent advertising on search engines and social media. Our latest data indicates that the volume of scam enquiries to us continues to rise.

We have, therefore, continued our work with the largest platforms to assess the application of the financial promotion regime to their business models and to make sure they do not host illegal content.

Following ongoing engagement, many of the largest search engines and social media platforms, including Google and Meta, have implemented new financial services verification policies to ensure they only allow financial promotions that are made by, or with the approval of, authorised persons.

We continue to engage with most other large online platforms to ensure these policies are implemented consistently and robustly.

We are also making greater use of technology in this area to prevent online fraud. For example, we are scanning approximately 100,000 websites every day to identify newly registered domains that show characteristics of a scam.

We are also working with a third party that specialises in identifying and removing illegal content from the web.

We have been clear that the protection of consumers from illegal online scams should be strengthened through clear legal obligations in the Online Safety Act 2023.

We will continue to work closely with Ofcom to develop a shared understanding of platforms’ obligations under the Online Safety Act and financial promotions legislation. We also look forward to the development of the Online Advertising Programme, which the Government consulted on in 2022.

Financial promotions on social media (including influencers)

This issue was first publicly raised in October 2021.

Firms are increasingly making use of social media to communicate financial promotions and generate business.  

We are particularly concerned by the way in which some firms encourage consumers to trade complex and high-risk products through social media and messaging platforms such as Instagram and Telegram. The risk to consumers can be exacerbated by firms partnering with unregulated introducers and affiliates (such as ‘educators’ and ‘influencers’) to reach new investors.

We are concerned by the increase in cases of social media influencers promoting financial products and services without knowledge of the rules governing such promotions, including an awareness that they could be communicating an illegal financial promotion. We are working with other regulators, including partnering with the Advertising Standards Authority (ASA), to educate ‘finfluencers’ (influencers that publicise content on financial matters) about the risks involved and their legal obligations when seeking to promote financial products or services.

Many of these unregulated influencers make promises of positive returns on investments and push the potential to achieve a celebrity-like lifestyle by trading high-risk investments such as CFDs, reinforcing this with images of holidays and expensive cars to promote the potential returns from trading these investments.

Recent evidence suggests that unregulated influencer marketing is leading to firms taking on younger consumers for whom the product promoted may not be appropriate. Our consumer research has shown that younger, less experienced consumers are far more likely to turn to social media to research investments. This exacerbates the risk of harm from these promotions. 

We also see unregulated ‘educators’ marketing trading courses with the potential to generate a secondary, or even primary, source of income from trading activity. Consumers signing up for these courses are often introduced to a firm (such as a CFD firm) offering trading in the relevant investment type as part of the process. In both cases, this leads to remuneration for the client introduction.

Consumers encountering these promotions on social media may not benefit from the risk warnings and other protections that we have prescribed to alert consumers to the high-risk nature of certain investments (such as the standardised risk warnings required of CFD providers which show that most clients will lose money).

We have intervened, and will continue to do so, where we identify unauthorised persons unlawfully communicating financial promotions online and where we find firms failing to ensure that prospective investors are adequately warned of the risks of investing, particularly in high-risk investments. 

We consulted on updated guidance for financial promotions on social media, to better reflect the way firms are using social media to advertise today and outline where unregulated influencers may be breaching the financial promotion restriction. We published our feedback statement and final guidance in March 2024.

Digital markets

This issue was first publicly raised in October 2021.

The FCA is a member of the Digital Regulation Cooperation Forum (DRCF) to support regulatory coordination in digital markets, and cooperation on areas of mutual importance.

The DRCF published its 2023/24 workplan and annual report. This sets out an ambitious programme of work for the DRCF, including projects that will tackle some of our biggest digital challenges. 

These include: 

  • supporting effective regulation of algorithmic systems
  • enabling innovation, research into digital assets 
  • supporting the implementation of the new Online Safety Bill in relation to illegal financial promotions
  • developing the use of technology in regulation 

We are continuing to work closely with DRCF members to deliver this ambitious and important programme of work.

The Government published the Digital Markets, Competition and Consumers Bill on 25 April 2023 which seeks to promote competition and tackle anti-competitive practice in digital markets by means of a new regulatory regime on certain firms designated with Strategic Market Status. 

The Bill proposes that the CMA consult the FCA when the CMA proposes to exercise certain functions under the new regime and where it considers that the matter falls in the FCA’s sectoral remit. The Bill also proposes that the FCA can make a recommendation to the CMA for it to exercise a certain aspect of its functions.

We are continuing to work with Government and relevant regulators on these issues and will monitor how developments may affect our perimeter.


This issue was first publicly raised in August 2017.

The UK payments industry continues to evolve rapidly. Today, we regulate more than 1,900 payment services firms that hold over £27bn safeguarded funds. Further market developments such as open banking, stablecoins, central bank digital currencies and the New Payments Architecture (NPA), will bring further changes to the UK’s payments landscape.

In October 2021, the Government published its response to its Payments Landscape Review: Call for Evidence. This set out its vision for a payments sector at the forefront of technology, ensuring consumer protection and choice, operational resilience, competition and harnessing innovation. Since then, legislation was introduced through the Financial Services and Markets Act 2023.

The Government continues to deliver on this vision, focusing on the priority areas it has identified: 

  • strengthening consumer protections within Faster Payments
  • unlocking the future potential of Open Banking
  • enhancing cross-border payments
  • future-proofing the UK’s payments regulatory and legislative framework with the opportunities created by the Future Regulatory Framework (FRF) Review for financial services regulation

In January 2023, the Government then published its Review of the Payment Services Regulations and ancillary Call for Evidence, as part of its assessment of the adequacy of the payments legislative framework.

As outlined in this review and call for evidence, the FCA will later this year publish a consultation paper on a new safeguarding regime for non-banks payment service providers. 

Recognising the changing risks in the industry as operating models evolve, we are working closely with the Treasury and other relevant regulators to achieve the Government’s vision, and to lay sustainable foundations for the next phase of growth and evolution of the UK payments market.

We will continue to seek to manage the risk of harm to consumers through our market intervention and policy work and in line with our strategy

These include managing risks of harm caused by firm failure, by improving firms' resilience and consumer protection, while continuing to promote competition and innovation that is beneficial to consumers.

The New Payments Architecture (NPA) is a voluntary industry initiative to renew the UK’s interbank payment infrastructure. Pay.UK is the delivery body for the NPA.

The Future of Payments Review was published on 22nd November, recommending that the government produces a National Payments Vision (NPV). As part of this work, the role of the NPA will be considered. In light of the NPV announcement, Pay.UK paused the NPA programme in December 2023.

Open Banking, Open Finance and Smart Data

This issue was first publicly raised in September 2017.

As set out in our 2022 to 2025 Strategy and Business Plan, we continue to support innovation and competition as a force for better consumer and market outcomes.

Open banking is an great example of greater competition and innovation bringing real benefits to consumers and businesses.

In March 2022, the Treasury, the CMA, the PSR and the FCA published a joint statement on the future of open banking. This explained how all these authorities are working together to define a common vision for open banking. The joint statement also announced a new joint regulatory oversight committee (JROC) led jointly by the FCA and the PSR to deliver this.

In April 2023, the JROC published its recommendations for the next phase of open banking in the UK, which outlined JROC’s vision for open banking to successfully move to a new phase – one offering more products and services – for which the ecosystem needs to scale and become more economically sustainable, while remaining reliable, resilient and efficient.

JROC’s April 2023 publication outlined a programme of work with 29 activities for the following two years to further develop open banking in line with the Committee’s vision.

JROC, with support and leadership from across the open banking ecosystem, has made progress across all of the themes identified in its April 2023 publication, covering application programme interface (API) availability and performance, financial crime, consumer protection, information flows to third party providers (TPPs) and end users, and promoting additional open banking services.

There will be a transition from the current Open Banking Implementation Entity (OBIE) to a future entity which can build on the significant progress made to date, and support the development of new, and improve existing, open banking propositions. 

The Committee’s recommendations of April 2023 reflected the government’s intention to legislate for a long-term regulatory framework for open banking and detailed the principles that will underpin that framework. The government intends to do this through the creation of a smart data scheme using powers to be provided in the Data Protection and Digital Information (No.2) Bill (DPDI Bill).

The JROC report of April 2023 stated that the Future Entity can be established in the interim state before the long-term regulatory framework is established.

In parallel, we continue to support firms through our Sandbox and direct support functions. We have authorised or registered over 130 open banking firms and supported over 50 payment firms using open banking technology in our Sandbox and Innovation Pathways service.

Our Sandbox provides firms with access to regulatory expertise. It gives firms the ability to test products and services in a controlled environment. Our Innovation Pathways service includes guiding firms through regulation via one-to-one discussions with a dedicated case manager assigned to provide insight, clarity and feedback on their business model. 

We are working with JROC members to understand opportunities to develop open banking propositions beyond existing use cases.

Developing these new initiatives requires a range of considerations, including the lessons we can learn from previous work on open banking, assessing the required regulatory framework, considering ongoing initiatives in other countries and working closely with industry as initiatives accelerate.

Access to cash

This issue was first publicly raised in March 2020.

The current retail cash services market consists of different service providers with different regulatory arrangements. This includes FSMA-authorised firms and payment service providers regulated by the FCA and payment systems overseen by the PSR.

The Bank of England’s functions also ensure the UK has a stable financial system. As a result, access to cash is a shared priority between us, the Government, the Bank of England and the PSR. 

We have a strategic objective of ensuring financial markets and markets for regulated financial services work well, while the PSR exercises its functions to support the retail distribution of cash to address consumer and SME interests in relation to payment systems within its regulatory purview.

Through changes made to FSMA 2000 by the Financial Services and Markets Act 2023, Parliament gave us the new purpose of ‘seeking to ensure reasonable provision’ of cash deposit and withdrawal services for personal and business current accounts across the UK. This includes access to both notes and coins, and access that is free of charge for consumers with personal current accounts. 

We closed our consultation on 8 February 2024 and expect to finalise our rules and issue our Policy Statement in Q3 2024. Our proposed rules will require banks and building societies designated by the Government to assess and fill local gaps, or potential gaps where there is a pending closure of a cash facility, in cash access provision that significantly impact consumers or businesses.

While the increasing range of digital services and payments options can make life easier, for many, the ability to withdraw cash is still vital. Cash remains particularly important for consumers with vulnerable characteristics and many SMEs. We currently collect regular data to map and monitor the coverage of cash access throughout the UK. Our update for Q1 2023 shows that, in terms of national coverage, 95.1% of the UK population are within 1 mile of a free to use cash withdrawal point such as cash machines and Post Office branches, with 99.7% of the UK population within 3 miles of one.

However, what is reasonable provision of cash access services may differ by location and our proposed regime aims to ensure provision of cash access services reasonably accommodates local need. It will require designated firms, acting alone, or through a designated coordination body, to establish a fair and transparent process for addressing gaps in local cash access provision. 

In delivering this new remit, we will work in alignment with the PSR which has a strategic outcome of ensuring everyone has access to payment services that meet their needs, including free-to-use ATMs as part of a shared approach to ensuring a sustainable cash infrastructure.

We are also closely engaging with the Bank of England, which was given new powers to supervise wholesale cash distribution under the Financial Services and Markets Act 2023.

The FCA does not have the power to require firms to provide particular banking services or products to consumers or businesses. As agreed by Parliament through FSMA, our new access to cash powers do not extend to the provision of wider banking services and are not directed towards the maintenance of branch networks or stopping bank branch closures generally. However, our proposed access to cash rules may still impact when firms may close branches because of the cash access they provide, supplementing our existing Branch and ATM Closures and Conversions Guidance.

This Guidance sets our expectations of firms when they are considering:

  • a full planned closure of a branch, all ATMs operated by them at a particular location, or a mobile bank facility;
  • a reduction in branch opening hours or days, or reduction in branch services, where this would have a significant impact on customers (including a reduction in opening hours of internal extended hours ATMs); or
  • conversion of a free-to-use ATM to pay-to use. 

While the decision to close, or partially close, a branch and/or ATM, or convert a free-to-use ATM to pay-to-use, is a commercial decision for firms, it is important that firms assess the likely impact of a closure on access to the full range of banking services. Under our Guidance, they are expected to consider alternatives that are or could reasonably be put in place to continue to meet customers’ needs.

We scrutinise firms’ closure plans as part of our usual supervisory work and will challenge firms, as appropriate, around the analysis that they have undertaken. Where firms fall short of expectations, firms should avoid causing harm by making sure that any proposed alternative service is in place and accessible to customers before a branch closure.

The Consumer Duty sets a higher standard of protection for banking customers, including where they are impacted by branch closures and ATM conversions. 

Under the Duty, firms should anticipate the foreseeable harm to their customers of any decision to close a branch or close or convert an ATM, and take steps to mitigate the impact of any potential harm.

Firms should engage with us if they are considering withdrawing or restricting access to products or services in a way that will have a significant impact on characteristics of vulnerability or on overall market supply. 


This issue was first publicly raised in June 2019.

Most cryptoassets and cryptoasset-related activities sit outside the regulatory perimeter. In October 2023, the Treasury published its consultation response on the future financial services regulatory regime of cryptoassets. 

This is in addition to previous Treasury consultations in 2020, and 2021, on proposals to extend the Markets Act FSMA (2000) (Financial Promotions) Order 2005 (FPO) to some unregulated cryptoassets which have now been passed in Parliament and has been in force since 8 October 2023.

This is as well as a Treasury consultation in January 2022 on plans to bring fiat-backed stablecoins (a subset of cryptoassets which aim to stabilise their value in relation to another asset) that, potentially, could be used for payments, into the FCA perimeter. We are working closely with the Treasury and other relevant regulators to progress these initiatives.

In the meantime, as future legislation is considered and as the use of cryptoassets and its underlying technology develops, we will continue to monitor the market and consider whether activities fall within our perimeter. 

For example, depending on the specific characteristics of the cryptoasset, and the nature of the arrangements and activities carried on in relation to them, a cryptoasset may be:

  • a derivative
  • a unit in a collective investment scheme
  • a debt security 
  • e-money 
  • another type of specified investment that falls within our existing perimeter

The activities carried on in relation to them could constitute regulated activities, such as dealing or arranging deals in investments, or establishing, operating or winding up a collective investment scheme. 

We will continue to act where we see harm and where we have the powers to do so. For example we imposed a variation or requirement under our own–initiative powers (OiREQ) on Binance Markets Limited, supported by consumer warnings about their activities in the UK as well as a variation of permission or the imposition of a requirement (VREQ) on a number of other firms.

However, our current powers over many types of cryptoasset-based activities are limited.

To combat money laundering and terrorist financing, in 2020 certain cryptoasset firms became subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs)

We expect firms to have robust AML control frameworks in place to manage the money laundering and terrorist financing risks from cryptoassets. A relatively large number of applications to us have been of poor quality and many of our assessments have identified significant problems. 

As of the end of May 2023, 318 applications for registration were received, of which 300 have been determined and 18 remained under assessment. Of the 300 determined, 41 firms were registered, 218 applications were withdrawn, 30 were rejected and 11 were refused. 

As legislated for by the Treasury, since 1 September 2023 cryptoasset firms who are executing transfers of funds will be required to collect and submit information when executing any cryptoassets transfer in order to comply with the Financial Action Taskforce ‘travel rule’. 

This will make it harder for criminals, terrorists and bad actors to use cryptoassets within the UK market.

Cryptoassets markets are cross border and therefore require international co-ordination to help mitigate the risks of harm posed. In developing the final rules, we continue to work closely with our international partners including standard setting bodies such as International Organization of Securities Commissions’ (IOSCO) on development of common standards for digital assets and co-ordination between jurisdictions. 

Cryptoassets financial promotions

This issue was first publicly raised in July 2023.

The Government has legislated to bring promotions of qualifying cryptoassets within the scope of the financial promotion regime. This has been implemented by the FSMA (2000) (Financial Promotion) (Amendment) Order 2023.

This regime applies to qualifying cryptoasset financial promotions that can have an effect in the UK, including marketing by overseas firms. 

It is estimated that there are over 200 cryptoasset exchanges, and many more firms providing other cryptoasset services that may be within scope of the regime. 

Unless a promotion is made, or approved by an authorised firm, or complies with an exemption in the Financial Promotion Order, firms will be committing a criminal offence if they continue marketing to UK consumers.

The definition of ‘qualifying cryptoasset’ that is in scope of this regime is set out in paragraph 26F of Schedule 1 to the Financial Promotion Order (FPO). Very broadly, a ‘qualifying cryptoasset’ is any cryptographically secured digital representation of value or contractual rights that is transferable and fungible. 

However, this does not include cryptoassets which meet the definition of electronic money or an existing controlled investment. 

The Government has decided not to bring Non-Fungible Tokens (NFTs), within scope of the financial promotions regime. These tokens have historically been used primary as digital collectibles such as to record ownership of digital-only artwork, music, or games. 

However, we have seen a number of cases where NFTs have been used as a speculative investment. In these cases, NFTs can give rise to similar risks to other cryptoassets, including risks related to misleading promotions, volatility and fraud. Firms may also attempt to increasingly use NFTs to avoid the financial promotions regime.

In its consultation response on a future financial services regulatory regime for cryptoassets, the Government notes that it intends to regulate activities rather than the asset itself. Therefore, if an NFT is used in a way that resembles a financial services activity, it would potentially be in scope of the future regime. 

Careful alignment between the financial promotions regime and future regulated activities for cryptoassets will be important to avoid unintended consequences and minimise scope for arbitrage. We will continue to work closely with the Treasury as these regulatory regimes develop. 

‘Exemption’ for MLR-registered cryptoasset firms

This issue was first publicly raised in February 2023.

The government has introduced a bespoke exemption in the FPO (Article 73ZA) for cryptoasset business registered with the FCA under the MLRs. This exemption enables cryptoasset businesses which are registered with the FCA under the MLRs, but which are not otherwise authorised persons for the purposes of FSMA, to:

  • communicate their own cryptoasset financial promotions
  • have cryptoasset financial promotions be communicated on behalf of them

Financial promotions can only be made on behalf of MLR-registered firms where the MLR-registered firm has prepared the contents of the communication and it complies with our financial promotion rules. 

MLR-registered cryptoasset businesses are not be able to approve financial promotions or communicate financial promotions in relation to other controlled investments. 

The Government has extended various FCA rule-making, supervision and enforcement powers in relation to registered cryptoasset businesses’ financial promotions.

Even with the extension of these powers, the legislative framework for MLR-registered firms is less robust compared with the framework that applies to firms authorised under FSMA.

In particular, registered cryptoasset businesses are not subject to the requirements of the Threshold Conditions. 

Therefore, the FCA is not able to apply the same assessment at the Gateway to firms seeking registration under the MLRs compared with firms seeking authorisation under FSMA.

In addition, registered cryptoasset businesses are not within scope of the Senior Managers & Certification Regime (SM&CR). 

This means that the FCA is not able to apply the same scrutiny to senior managers in MLR-registered cryptoasset businesses compared with authorised firms.

We welcome the Government’s announcement that this exemption is intended to be temporary until the wider regulatory regime for cryptoassets is established. We will continue to work closely with the Government on this issue.

Cryptoassets and stablecoins potentially used for payments 

This issue was first publicly raised in October 2021.

Cryptoassets have potential benefits for the financial services industry, for instance, stablecoins could be used to facilitate fast and low-cost payments.

In April 2022, the Treasury published its consultation response confirming the extension of the perimeter to cover fiat-backed stablecoins, where that could potentially be used as a means of payment. 

This will include a new regulated activity for the custody of such stablecoins. We are working with the Treasury, the Bank and the PSR to develop an appropriate regime, including considering whether any adaptations may be needed to FCA rules and guidance, to support innovation while protecting consumers and the market. 

Cryptoassets used for investment 

This issue was first publicly raised in October 2021.

Where consumers are speculating on the value of cryptoassets – buying them with the hope of making a profit – we have seen increased risks for retail customers and the market. This includes a range of activities, from speculative purchases to more complex propositions claiming to offer retail consumers significant long-term returns.

The last year has seen a number of cryptoasset firm failures, hacks and deprecating values. We continue to remind consumers with warnings that they should not buy cryptoassets unless they are prepared to lose all their money.

The Treasury consultation response in October 2023, on a future regulatory framework for cryptoassets proposed a number of new cryptoasset regulated activities, which if legislated for would expand the FCA’s perimeter in respect of the cryptoasset sector. 

We continue to work with the Treasury on what further regulatory or legislative change is required to build a future regime for cryptoassets, and how it can best reduce risks to both consumers and markets. 

Wholesale markets

Wholesale financial markets play a vital role in our economy. They enable companies and governments to access capital and give institutional and retail investors opportunities to invest.

Wholesale markets facilitate domestic and international trade and underpin growth and prosperity.

Record capital raising in 2021 helped support economic recovery from the pandemic. 

ESG data and rating providers

This issue was first publicly raised in June 2021.

In our Environmental, Social and Governance (ESG) Strategy, we committed to ’supporting integrity in the ESG ecosystem, by encouraging improvements in ESG data, ratings, assurance and verification services’.

ESG data and ratings, which are currently unregulated, are increasingly embedded into financial services firms’ investment processes. But they can vary widely in what they measure and how they are defined. In particular, ESG ratings can significantly influence capital allocation when used in the design of indices and benchmarks.

In June 2022, we published a Feedback Statement bringing together the feedback received to our Consultation Paper’s discussion chapter – which covered the role and regulatory oversight of ESG data and ratings providers. We noted that ESG data and ratings products should be transparent, well governed, independent, objective and based on reliable and systematic methodologies and processes to:

  • ensure users can interpret what these products aim to measure and how
  • give the market confidence in the reliability and quality of these products 

Given some of these conditions may not be fully met in practice, and the benefit to wider market functioning of an effective, trusted and transparent market for ESG data and ratings, we concluded that we see a clear rationale for regulatory oversight of certain ESG data and ratings providers.

We also emphasised that we favour a globally consistent regulatory approach, informed by the IOSCO recommendations on ESG data and ratings. We actively contributed to these recommendations. 

Following the Chancellor’s announcement in 2022 that the Government wants to ensure improved transparency and good market conduct for ESG data and ratings, the Treasury published a consultation on bringing ESG ratings providers within our regulatory perimeter. As part of the March 2024 Spring Budget, HMT announced it will proceed with the perimeter extension for ESG ratings providers.

We welcome this decision, and will work to develop a proportionate and effective regulatory regime, with a focus on transparency, good governance, managing conflicts of interest and proper systems and controls.

We have recognised that setting up a new regulatory regime would take time.

In November 2022, we convened the Secretariat, consisting of the International Capital Market Association (ICMA) and the International Regulatory Strategy Group (IRSG), to appoint and lead an independent group mandated to develop an industry-led, voluntary Code of Conduct for ESG data and ratings providers. 

Following a consultation process, the final Code was published in December 2023. We anticipate the Code will help promote more rapid development of best practice, a globally consistent approach, and could continue to apply for providers that fall outside the scope of potential future regulation. 

In parallel, other jurisdictions are considering closer regulatory oversight of ESG data and ratings providers. The European Union finalised their proposals for their ESG Ratings regime in February 2024 and India introduced their regulatory framework with effect from July 2023.

Noting the global reach of these providers and the importance of globally consistent regulation in this market, we will continue our engagement with other international financial authorities, both bilaterally and via IOSCO, to work towards regulatory alignment and avoid fragmentation.

Senior Managers and Certification Regime

This issue was first publicly raised in October 2021.

The Senior Managers and Certification Regime (SM&CR) is a key part of transforming culture in the financial industry and an important supervisory tool. But Recognised Investment Exchanges (RIEs), and Credit Ratings Agencies (CRAs) are not currently subject to the SM&CR.

We believe extending the regime to them would deliver greater accountability and robust oversight of functions that promote market integrity. It would also ensure consistency of our supervisory expectations of individuals discharging key responsibilities, an important issue also highlighted by recent experience of market volatility events. 

The Financial Services and Markets Act 2023 will enable the SM&CR to be extended to RIEs and CRAs. As outlined above, we see value in extending the SM&CR to these firms and will continue to work with the Treasury on this issue. Payments, e-money and crypto firms are also not currently subject to the SM&CR.

We consider that extending the regime would strengthen individual accountability and governance in firms and strengthen our ability to supervise them by giving us a wider range of tools to drive higher standards and reduce risks of consumer harm. 

The Financial Services and Markets Act 2023 does not enable the SM&CR to be extended to payments and e-money firms, but we continue exploring possible options with Treasury and see value in extending the SM&CR to these firms. 

The SM&CR is currently being reviewed by the FCA and PRA as well as the Treasury. The Government announced this review of the SM&CR as part of its Edinburgh Reform package in December 2022.

At the end of March 2023, we published the Senior Managers and Certification Review Discussion Paper, jointly with the PRA. The Discussion Paper consultation closed in June 2023, and we plan to consult on potential changes to the regime in Q2 2024.

The Treasury has, in parallel, launched a Call for Evidence to look at the legislative aspects of the regime.

These reviews aim to identify ways to improve the regime to help it work better for firms and regulators, while preserving its underlying aims. It also invites views on its scope.

Overseas Persons Exclusion

This issue was first publicly raised in October 2021.

The Overseas Persons Exclusion (OPE) is available to an overseas person who carries out certain regulated activities in the UK without requiring authorisation, so long as the person does not do so from a permanent place of business maintained in the UK. This exclusion also has some additional conditions. 

In April 2022, we set out our view that the OPE is not intended as a means to run a UK-focussed business as this creates risks particularly to the FCA’s market integrity objective, given we do not have any supervisory oversight of these activities.  

In our view, greater information requirements and powers along with greater visibility and oversight of firms using the OPE would be beneficial and the overseas perimeter would benefit from greater clarity about when a regulated activity is being carried on in the UK.

Oil and Energy Market Participants

This issue was first publicly raised in July 2021.

Our regime for commodity derivatives includes a regulatory regime for firms which are referred to as oil market participants (OMPs) and energy market participants (EMPs).

The OMP and EMP authorisation statuses are specific applications of the FSMA requirements, for firms that undertake a limited range of activities.

Our predecessor, the Financial Services Authority (FSA), inherited the regulation of these firms from the Securities and Futures Authority (SFA).

In 2011, the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) introduced a market abuse regime and transaction reporting for physical gas and power markets for activities that are outside MiFID’s scope. The principal regulatory authority for REMIT in the UK is Ofgem.

The UK MiFID-based regime and MAR also take account of the scope of the UK version of REMIT. 

In 2021, the Treasury consulted on a proposal to take OMP and EMP firms that are not MiFID investment firms outside of the regulatory perimeter through its Wholesale Markets Review.

However, some responses were concerned that the changes could have unintended effects in how firms are authorised and the requirements with which they have to comply. 

The Government and FCA will keep this part of the regime under review but are not planning to make any amendments at this time.

The FCA continues to support other work undertaken by the Treasury as part of the Wholesale Markets Review to reform and simplify the ancillary activities test as part of the domestic perimeter for all firms, including OMPs and EMPs, using commodity derivatives on an ancillary basis to their main commercial business.

Investment consultants

This issue was first publicly raised in November 2016.

Investment consultants provide unregulated services that can significantly influence the investment strategies of asset owners and asset managers. For example, investment consultants advise pension fund trustees on issues such as strategic asset allocation and asset manager selection.

In our Asset Management Market Study, we identified serious concerns about competition in investment consultancy and fiduciary management. This is something we highlighted again in the context of the Liability-Driven Investment work in 2022. 

We referred these sectors to the CMA for a detailed investigation. The CMA recommended that investment consultancy services should be brought within our supervisory remit. 

Before the pandemic, the Treasury had planned to consult to bring these services into our perimeter. The Treasury had to put this work on hold in light of other key priorities such as its response to coronavirus. While we note the decision on when to restart this work is a decision for the Treasury, we continue to support these services being brought into our perimeter.