This week, we lead with the Government’s proposals for consolidating the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA). The vision is clear and familiar in the current climate: to support growth, better manage burdens on businesses and minimise overlaps between regulators’ responsibilities. Despite the scale of the ambition, the core design principles for the merging of the regulators’ respective functions are seemingly unremarkable, in the form of a ‘lift and shift’. Inevitably, achieving practical integration and meaningful synergies will be a tougher task.
Elsewhere, we pick up a suite of recent announcements across financial crime and market abuse. And in other news, we cover steps to address competition concerns at the London Stock Exchange.
HM Treasury has recently launched a consultation on proposals to integrate the Payment Systems Regulator (PSR) into the FCA, aiming to simplify the UK’s payments regulatory framework. The initiative seeks to reduce duplication, enhance clarity and create a proportionate regime that fosters innovation, competition and consumer protection in a fast-evolving market.
The consultation outlines how the FCA would assume the PSR’s responsibilities, retain the designation regime for significant payment systems, and adopt objectives aligned with competition, innovation and service-user interests. It also proposes granting the FCA powers equivalent to those currently held by the PSR and moving towards a single access regime. Responding to the launch, David Geale, FCA Executive Director and PSR Managing Director, said the changes will deliver “a clear, predictable and proportionate regulatory framework” and highlighted joint progress on Open Banking and the National Payments Vision as examples of a more streamlined approach already underway.
Stakeholders are invited to submit feedback by 20 October 2025. The government will review responses to shape its final policy and intends to bring forward legislation when Parliamentary time allows.
Read more on the response to Government consultation on future of payment systems regulation
Read more on the streamlined approach to payment systems regulation
The FCA has published its Market Watch 83 which outlines key findings from recent reviews of corporate finance firms advising small and mid-cap companies.
The reviews identified heightened risks of market abuse due to poor controls regarding inside information. Issues identified include excessive market sounding recipients, weak gatekeeper processes, and inconsistent information sharing. Smaller firms were found to be particularly vulnerable due to informal compliance cultures and inadequate oversight.
The FCA emphasised the importance of robust policies, independent compliance functions, and clear procedures for personal account dealing. The regulator has also encouraged firms to apply its observations in benchmarking their systems and controls to ensure alignment with UK market abuse regulations and uphold market integrity.
Read more on Market Watch 83
The Home Office has published the latest outcomes progress report for the UK’s Economic Crime Plan 2 (ECP2) highlights significant strides in tackling economic crime, protecting national security, and supporting legitimate economic growth.
Key reporting include a notable increase in money laundering prosecutions and convictions, with 6,845 prosecutions and 3,756 convictions in 2024—a 36% and 7% rise, respectively. Law enforcement disruptions against fraud and illicit finance have also surged, with high-harm disruptions up by 18% for illicit finance and 55% for fraud.
A particular highlight is the growing impact of Suspicious Activity Reports (SARs) and Defence Against Money Laundering (DAML) requests. In the financial year ending 2024, DAML requests resulted in £240.1 million being denied to suspected criminals, and SARs overall contributed to asset denials totalling £230.4 million in 2023—representing 36% of all assets denied that year. These intelligence-led interventions are increasingly central to the UK’s asset recovery efforts. Additionally, Companies House reforms have also improved transparency, with 32,000 entities now on the Register of Overseas Entities and over 106,000 addresses removed where personal data was misused.
Despite these advances, the report notes ongoing challenges in measuring overall progress, with further data development underway.
The FCA’s Office for Professional Body Anti-Money Laundering Supervision (OPBAS) has issued findings from its second phase review of Suspicious Activity Reports (SARs). While improvements were noted, OPBAS warns that the quality of SARs submitted by some professional body supervisors (PBSs) remains inconsistent, risking gaps in intelligence for law enforcement.
The review highlights common weaknesses, including insufficient detail on suspicion rationale and poor structuring of reports. OPBAS urges PBSs to strengthen training and quality assurance processes to ensure SARs are clear, comprehensive and timely.
This work forms part of OPBAS’s broader strategy to enhance anti-money laundering supervision across the legal and accountancy sectors, aligning with the UK’s Economic Crime Plan and Professional Enablers Strategy.
PBSs should review their SAR processes, reinforce staff guidance and consider OPBAS’s recommendations to avoid supervisory scrutiny.
Read more on the OPBAS Suspicious Activity Report project
The FCA is consulting on proposals to ensure fair access to the rooftop of the London Stock Exchange Group’s (LSEG) data centre. Currently, only LSEG can install radio equipment for low-latency connectivity services (LLCS), giving it a competitive edge. To address these concerns, LSEG and the landlord have offered commitments to provide equal rooftop access to other firms.
The FCA believes this move will promote competition in the provision of LLCS on the LSE-ICE route, a critical link for high-speed trading. The consultation forms part of the FCA’s broader work to prevent anti-competitive practices in financial markets infrastructure.
Stakeholders are invited to comment on the proposed commitments before the FCA finalises its decision.
UK Regulatory Handbook 2024
An essential guide to the regulatory landscape for financial services
