The GRC Navigator

The FCA has announced several measures aimed at streamlining regulatory obligations:

• Portfolio Letter Replacement: The regulator will phase out its portfolio supervision letters in favor of broader market reports, reducing duplication and providing more consistent guidance across sectors.
• Red Tape Reduction: A proposal to cut regulatory burden for investment firms by up to 70%, with specific focus on simplifying capital requirements for smaller firms.
• SDR Plans Halted: The FCA has paused implementation of the Sustainability Disclosure Requirements (SDR) for portfolio managers, responding to industry feedback about implementation challenges.
• AI Testing Support: A new live testing service for artificial intelligence applications in financial services has been launched, indicating the regulator’s more innovation-friendly approach.

The PRA has published several policy statements over the past quarter:

• PS5/25: Step-in Risk, Shadow Banking Entities and Groups of Connected Clients – Clarifies exposure limits for connected counterparties – Provides detailed guidance on shadow banking entity identification and monitoring – Introduces standardized risk assessment frameworks for step-in risk
• PS4/25: FSCS Management Expenses Levy Limit – Sets the management expenses levy limit for 2025/26 – Ensures appropriate funding for the deposit protection scheme operations
• PS3/25: PRA Approach to Policy – Outlines modernized regulatory approach following post-Brexit review – Emphasizes proportionality principles for different institution types – Introduces revised consultation timelines to enhance industry engagement
• PS2/25: Streamlining Firm-Specific Capital Communications – Reduces regulatory reporting burden while maintaining prudential standards – Simplifies capital requirement communications

FSCS Deposit Protection Limit

The PRA has proposed increasing the Financial Services Compensation Scheme (FSCS) deposit protection limit to £110,000 from the current £85,000.

“The increased FSCS limit represents a practical response to inflation since the last adjustment and helps maintain confidence in the UK banking system.” — Robert Jenkins, Former Member, Bank of England Financial Policy Committee

• Current FSCS limit: £85,000 (unchanged since 2017)
• Proposed new limit: £110,000 (+29%)
• EU equivalent (€100,000): ~£85,000 at current exchange rates
• US equivalent (FDIC): $250,000 (~£195,000)

Insurance Special Purpose Vehicle Framework

The PRA is consulting on reforms to the UK Insurance Special Purpose Vehicle (ISPV) regulatory framework, seeking to:

• Enhance operational flexibility for insurance-linked securities
• Streamline approval processes for established structures
• Maintain appropriate safeguards while supporting market growth

Operational Resilience

The PRA has finalized its policy on operational resilience for critical third parties to the UK financial sector (PS16/24), focusing on:

• Enhanced oversight of technology and service providers
• Mandatory resilience testing and reporting
• Coordinated approach with FCA to reduce duplication

Palatine Private Equity has raised £254 million for its largest fund to date, with strong re-ups from existing limited partners. That points to continued appetite for UK mid-market deals despite macroeconomic uncertainty.

Alternative Investment Fundraising Momentum

INFO SECTORS: ASSET MANAGEMENT, PRIVATE CREDIT

Several fund closes point to continued institutional appetite for alternative strategies:

• LLR Partners has closed its seventh fund at $2.45 billion, exceeding its initial target
• Private credit investor Escalate Capital celebrated 20 years with a new $350 million fund close
• StepStone secured $705 million for its fourth tactical growth fund targeting companies “outside traditional VC ecosystem”
• Allied Industrial Partners hit its $300 million hard cap for its debut fund after previously operating on a deal-by-deal basis

Cross-Border Venture Activity

INFO SECTORS: ASSET MANAGEMENT, VENTURE CAPITAL

UK tech investor Volution has teamed with Japan’s SBI to raise a new $100 million fund aimed at bridging the Series A and B funding gap. It is another cross-border tie-up, and a possible source of expansion capital for UK growth companies.

ESG Fund Launches Continue Despite Regulatory Pause

MEDIUM RISK SECTORS: ASSET MANAGEMENT

Despite the FCA halting certain SDR requirements, sustainable investing continues to attract product development:

• Franklin Templeton has launched ESG-enhanced, low-carbon S&P 500 and World ETFs
• RLAM has adopted the Sustainability Focus label across its £11 billion portfolio range

The global asset management industry has reached a record $128 trillion in assets under management, with active ETFs emerging as a particular growth area. Regulatory differences between jurisdictions will shape how much of that growth UK managers can capture.

The US Department of Justice has disbanded its crypto investigation unit, while the SEC staff has issued guidance clarifying that certain dollar-backed stablecoins may not implicate securities laws. Together they point to a lighter-touch turn in US crypto policy, the opposite direction from the UK’s proposed framework.

UK consumer confidence has fallen to record lows amid global trade tensions and tariff concerns. That carries implications for credit risk, investment strategy and market volatility as economic uncertainty grows.