THE GRC NAVIGATOR
Your Bi-Weekly GRC Intelligence Briefing
Issue 13 | 17 November 2025
Executive Summary
Top Story: FCA Enforcement Focus - CFD Fair Value Failures Signal Supervisory Engagement
The FCA’s review of Contracts for Difference (CFD) providers on 13 November 2025 identified widespread failures to meet Consumer Duty obligations on fair value, representing a direct enforcement signal. The multi-firm review examined how firms deliver price and value across bid-offer spreads, commissions, and overnight funding charges, finding that some firms have not risen to Consumer Duty standards.
KEY ELEMENTS INCLUDE:
• Systematic fair value testing against market benchmarks now a supervisory focus area.
• FCA expects firms to demonstrate regular pricing tests using independent pricing feeds and inter-dealer markets.
• Documentation requirements for fair value methodology with clear escalation procedures.
• Board reporting must include fair value compliance status in risk and compliance frameworks.
• Failures signal potential enforcement.
Compliance teams must conduct fair value assessments, test execution prices against relevant market data, and ensure current systems have audit trails for FCA review. The enforcement focus extends beyond pricing to include the entire customer journey.
Regulatory Updates
FCA Statutory Investigations Policy: Escalation from Supervision to Public Post-Mortem
The FCA’s republished Statement of Policy on 14 November 2025 clarified statutory investigation procedures with substantive changes to monetary thresholds. The policy now pins down precisely when the FCA must escalate from “business as usual” supervisory tools to a statutory investigation with public reports to HM Treasury.
The trigger requires both conditions to be met: events involving a regulated person that indicate significant failure to secure consumer protection or adverse effects on integrity/competition objectives, AND those events might not have occurred but for a serious failure in the statutory regulatory system or its operation.
• Monetary thresholds for determining “significant” consumer detriment revised upwards in line with inflation, with periodic future updates.
• Makes “regulatory failure” a governance concept rather than purely political. The trigger is not simple firm misconduct but serious failure in design or operation of the regulatory system.
• Creates dual risk tracks for SMF holders: ordinary enforcement focused on firm/individuals plus possible statutory investigation track focused on regulators’ own performance.
• Raises the bar on record-keeping with forensic scrutiny expected of documentation, escalation logs and Board-level risk discussions.
• Although investigations remain “exceptional events,” firms approaching thresholds must expect increased regulatory engagement.
Governance teams must map existing incident frameworks against the statutory investigation test, ensuring high-impact failures include enhanced documentation and Board oversight. SMF training must reflect that in major failures, the FCA will assess its own statutory duties alongside firm compliance, influencing information requests and cooperation expectations.
Credit Builder Products: Evidence of Ineffectiveness Drives Product Exits
The FCA’s thematic review on 10 November 2025 found little evidence that credit builder products actually improve credit scores for most consumers. Five firms have already stopped offering these products following FCA engagement, with others changing business models and marketing.
• Products can misrepresent customers’ financial positions and may facilitate access to unaffordable credit.
• For consumers already in difficulty, products are even less likely to improve scores and can divert income from essential costs.
• Many products are unregulated, but this doesn’t remove them from Consumer Duty’s orbit where they form part of wider customer journeys within FCA jurisdiction.
• Products whose main selling point is “build your credit score” but don’t deliver for majority of users risk being treated as poor value or misleading.
The clear direction establishes that effectiveness evidence is now mandatory for credit-improvement claims. Firms should also consider how similar expectations would apply to other ‘credit-builder’ propositions such as rent-reporting services, even though these were outside the scope of the FCA’s review.
Financial Wellbeing: From Regulatory Concept to Compliance Framework
Sarah Pritchard’s TISA speech on 12 November 2025 established financial wellbeing as the interpretive lens for existing Consumer Duty obligations. While not creating formal new rules, the FCA explicitly uses wellbeing as the frame for its strategy and regulatory tools.
The FCA wants to help consumers navigate their financial lives in a changing world where there is “no such thing as one size fits all”, and links this directly to its new five-year strategy focused on deepening trust, supporting growth and improving lives.
Pritchard highlights two structural challenges. pension adequacy and declining home ownership. Many consumers are not saving enough or are drawing on pensions too quickly, while the proportion of retired renters is expected to more than double by 2041.
In response, the FCA is.
• introducing a targeted support framework and working to make pensions dashboards a reality.
• using mortgage policy, including proposed changes to lending rules and clarification of existing flexibility, to widen access to home ownership and support later life lending.
The FCA reiterates that it will only make new consumer protection rules where really needed and only if the Consumer Duty is not enough, and that the Duty itself “is not once and done”.
Pritchard stresses that the FCA has already set higher standards through the Duty, and now wants a wider national conversation about where the balance of risk should fall. Regulators can express a view, but should not set the national risk appetite alone.
Targeted support is described as “revolutionary” and as an example of using regulation to rebalance risk, by helping more consumers move from cash into appropriate investments without lowering protection standards.
“There is no such thing as one size fits all in financial decision-making. Consumers have different life experiences, risk appetites and financial pressures.”
— Sarah Pritchard, FCA Deputy Chief Executive
Product development committees must now document how housing, longevity and cost-of-living realities factor into design and communications. Internal Consumer Duty MI and Board reporting for retail and defined contribution offerings must explicitly incorporate financial wellbeing metrics.
PRA Developments
PS22/25: Leverage Ratio Threshold Increased to £75 Billion with Averaging Mechanism
PRA finalised leverage ratio retail deposits threshold at £75 billion (higher than £70 billion proposed in CP2/25)
• Three-year averaging mechanism introduced to smooth temporary fluctuations.
• Non-UK assets threshold remains at £10 billion.
• Policy applies to CRR firms and consolidation entities from 1 January 2026.
• Intended to preserve Financial Policy Committee’s original risk appetite.
• Addresses inadvertent tightening caused by nominal GDP growth since 2016.
The averaging mechanism improves firms’ ability to plan for entering scope without sudden regulatory step-changes. This influences how large UK banks price prime brokerage, securities financing and derivatives intermediation services. Firms near the threshold gain clearer runway to manage growth without sudden capital constraints.
Bank of England Systemic Stablecoin Framework
Comprehensive regulatory regime for sterling-denominated systemic stablecoins (consultation 10 November 2025)
• HM Treasury decides “systemic” designation based on BoE advice considering transaction volumes/values, substitutability, interconnectedness.
• Joint regulation: BoE (prudential/systemic) and FCA (conduct/consumer protection).
• Backing assets: minimum 40% unremunerated central bank deposits, maximum 60% short-term sterling UK government debt.
• Capital anchored in Principles for Financial Market Infrastructures—six months operating expenses minimum.
• Holding limits: £20,000 for individuals, £10 million for businesses with exemptions.
Crucially, coinholders must have robust legal claims to redeem at par on demand, with valid requests met by end of business day. Backing assets held under statutory trust for coinholders’ benefit. The regime’s tight parameters reflect concerns that widespread adoption could drain bank deposits and impair credit supply.
Trading Relationships as Systemic Risk Buffers: Credit Suisse Evidence
Bank of England Staff Working Paper No. 1,154 analyses FX derivatives market during Credit Suisse collapse
• Clients heavily exposed to Credit Suisse faced 16 basis point larger increase in spreads per notional dollar.
• Clients with greater dependence on Credit Suisse saw materially larger spread increases both at Credit Suisse and at their other dealers.
• Dealer-client relationships highly persistent with significant fixed costs to establish new ones.
• Diversified dealer networks effectively form systemic risk buffers.
• High concentration with one or two dealers creates vulnerability even if overall market liquidity appears deep.
The research demonstrates that trading relationships facilitate continued market access in stress but leave concentrated clients bearing more dealer balance-sheet shock costs.
Fund Launches & Capital Raises
Record-Breaking Arlington Capital Fund Close
Asia-Pacific Fundraising Momentum
• Orix and Qatar Investment Authority launched a $2.5 billion Japan-focused PE fund (11 November 2025) targeting succession deals and corporate carve-outs in Japan’s mid to large-cap market
• ChrysCapital closed Fund X at $2.2 billion (6 November 2025), the largest India-focused PE fund to date, accepting Indian LPs for the first time
• Backed VC closed its third fund at $100 million cap (13 November 2025), with higher US presence and broader events strategy
European Growth Credit Expansion
Secondary and Debut Funds Signal Market Depth
• Aspirity Partners I closed oversubscribed at €875 million, hitting its hard cap (6 November 2025)
• Aquilius Investment Partners raised a $750 million secondary investment vehicle (5 November 2025)
• Apollo and 8VC launched new investment vehicle targeting tech firms in aerospace, advanced manufacturing, life sciences, logistics and natural resources (3 November 2025)
• Fortitude targets AUD200 million for first institutional PE fund (3 November 2025)
Enforcement Watch
Since 1 November 2025, the FCA’s visible enforcement activity has largely consisted of Final Notices and Notices of Decision cancelling Part 4A permissions for small consumer credit and retail firms. The regulator continues using its Schedule 6A cancellation power at scale to clear dormant permissions.
• Multiple motor dealers, dental practices, furniture and plumbing retailers have lost their permissions.
• Cancellations on “housekeeping” grounds: non-payment of periodic fees, failure to submit returns, evidence of ceased regulated activity.
• No new monetary penalties or headline cases against investment firms or asset managers.
Market Developments
Private Credit Challenge to Traditional Banking
UK banks have told a Lords committee that strict capital rules are pushing lending into private credit funds, leaving them at competitive disadvantage. The growth of privately rated deals and new rating providers has regulators and bankers uneasy about opacity and incentives in the shadow banking sector.
• Banks, regulators and private credit in three-way tussle over who holds risk
• Capital rules and privately rated structures under growing scrutiny
• Leverage quietly rebuilding in UK gilts market via insurers’ derivative strategies, with uncomfortable echoes of 2022 LDI episode
• Growing insurer appetite for pension buyouts changes liability profile of corporate sponsors
Digital Assets Evolution
Operational Resilience and Cloud Oversight
ALL FINANCIAL SERVICES
AI Governance and Human Oversight Requirements
Dominic Holland’s speech on 14 November 2025 emphasised that as AI and automation increase in financial markets, the FCA expects firms to maintain human oversight, judgment, and accountability and not delegate decision-making entirely to algorithms.
- AI governance is now an explicit FCA compliance concern.
- Firms must demonstrate human control and accountability in algorithmic decision-making.
- Risk of enforcement action against firms with inadequate AI oversight is real.
- Governance frameworks must address algorithm governance, bias testing, and human escalation.
- This applies to trading, underwriting, credit decisions, customer segmentation, and pricing.
Regulatory Calendar
• 21 November: FCA consultation on fund tokenisation (CP25/28) closes for chapters 2–4 (Progressing fund tokenisation).
• 12 December 2025: Extended deadline for responses to FCA consultation on Motor Finance Compensation Scheme.
• 16 December: FCA consultation on short selling regime closes.
• 1 January 2026: PRA Leverage Ratio threshold changes take effect.
• 1 January 2026: Bank of England MREL policy changes. revised policy on the minimum requirement for own funds and eligible liabilities (MREL) takes effect.
• 10 February 2026: Bank of England stablecoin consultation’s deadline response.
Question of the Week
With the FCA now requiring quantitative evidence of consumer benefit for product claims and interpreting Consumer Duty through a financial wellbeing lens that encompasses housing costs and retirement adequacy, how should asset managers redesign their value assessment frameworks to demonstrate genuine support for clients’ long-term financial resilience rather than just relative performance metrics?
We welcome your perspectives on this challenge.
Insight
The FCA’s recent CFD review illustrates conduct, customer outcomes, and digital oversight are becoming core compliance signals as pricing practices are now evaluated through the lens of Consumer Duty. Boards are expected to oversee fair value delivery, supported by robust pricing tests, independent benchmarks, and board-level reporting. Product governance is under similar scrutiny.
Firms must evidence clear consumer benefit and outcome-based design. This marks a structural change in how product compliance is judged. Compliance teams must now consider customer vulnerability, inclusion, and segmentation—not as peripheral ESG concerns, but as measurable obligations embedded in governance and product design.
AI governance is now a supervisory priority. Firms must demonstrate human accountability in automated decision-making, with bias testing, override protocols, and algorithmic audit trails.
Meanwhile, the operational resilience agenda is expanding, with cloud service providers preparing for direct regulatory oversight. This requires new risk frameworks for third-party dependencies. Heading into 2026, firms must recalibrate compliance frameworks to reflect these shifts. Pricing integrity, product effectiveness, human-led AI governance, and operational resilience will define regulatory credibility going forward.