The GRC Navigator

The FCA finalised new rules on August 7 to strengthen consumer protection in the event of payment firm insolvency, with the new “supplementary regime” set to take effect on May 7, 2026. They were introduced to address weaknesses exposed in previous firm failures, and they raise the compliance bar.

KEY REQUIREMENTS: • Annual audits by qualified auditors – Moving beyond self-certification to independent verification • Monthly reporting obligations – Real-time supervisory monitoring replacing quarterly retrospective reviews • Daily reconciliation checks – Ensuring precise safeguarding of customer money • Resolution planning requirements – Mandatory contingency frameworks for rapid customer fund return • Enhanced segregation standards – Stricter operational boundaries between firm and client assets

The daily reconciliation requirement will be the most challenging operationally. Firms should invest now in automated reconciliation systems and real-time monitoring dashboards.

Recent regulatory briefings show a divergence between UK and EU approaches to ESG rating providers. The EU’s new regulation, effective from July 2, 2026, includes a restrictive third-country regime with a difficult-to-meet “reverse solicitation” exemption and a low turnover cap (€15 million) for firms seeking recognition. The UK, conversely, has yet to specify its market access regime, creating a complex and restrictive environment for non-domestic providers. The UK is making selective decisions on where to align with EU rules and where to build bespoke frameworks. Firms will need jurisdiction-specific compliance strategies, particularly for cross-border operations.

The FCA’s £46 million fine against Neil Woodford and Woodford Investment Management on August 5, 2025, for “unreasonable and inappropriate investment decisions” sets a precedent for fund management accountability. Woodford himself was fined £5.89 million and banned from senior management roles.

GOVERNANCE IMPLICATIONS: • Personal liability for liquidity management failures now clearly established • Questions raised about regulatory perimeter as Woodford continues operating W4.0 platform outside FCA oversight • WIM’s defense citing Link Fund Solutions’ approved framework highlights the complex liability chain in delegated fund administration • Upper Tribunal referral means final precedent remains pending, creating continued uncertainty

Sigma Broking Limited’s £1,087,300 fine on August 1, 2025, for five years of transaction reporting failures signals a shift toward data-driven enforcement. The FCA said these failures “risked market abuse going undetected,” treating poor data quality as a material enforcement risk.

The FCA announced on August 1 that firms will soon be able to offer crypto exchange-traded notes (ETNs) to retail consumers, a change in the UK’s approach to digital asset access. This follows extensive consultation on appropriate consumer protections.

Insights: The bigger opportunity is tokenising traditional assets, from fund interests to insurance policies. Boards should establish digital asset strategies now, focusing on operational efficiency rather than speculation.

The Bank of England’s decision to cut the Bank Rate by 25 basis points to 4% on August 7, 2025, marks the fifth consecutive reduction since August 2024. The split MPC vote reflects the tension between supporting growth (Q2 2025 growth of just 0.3%) and managing persistent inflation concerns.

KEY IMPLICATIONS: • Inflation trajectory revised: BoE now expects peak at 4% in September before returning to 2% target by Q2 2027 • O-SII buffer increases: PRA reissued 2024 buffer rates with 27% increase for systemically important institutions • Net interest margin compression: Banks must recalibrate revenue models amid declining rate environment • ALM challenges: Institutions face complex hedging decisions with uncertain rate trajectory

The Bank of England and FCA’s joint policy statement on UK EMIR amendments, with changes effective January 26, 2026, continues to refine the derivatives reporting framework. The addition of ‘execution agent’ as an optional field and clarifications on FX swap reporting reflect lessons learned from implementation challenges.

CONSULTATIONS: • Pillar 2A review – Extended to September 30, 2025, aligning with Basel 3.1 implementation • IRB mortgage approach – Simplification for mid-sized firms through PRA-prescribed LGD values (closes October 31, 2025) • RT2 and CHAPS hours extension – Proposed 1:30 am opening for settlement (comments due October 21, 2025)

The Bank of England published its Q2 2025 Asset Purchase Facility report on August 12, detailing the ongoing unwinding of quantitative easing measures. The facility continues its gradual reduction in line with previously announced targets.

The August 2025 Market Participants Survey, published August 8, reveals shifting expectations about monetary policy trajectory and economic outlook. Key findings indicate growing concerns about growth momentum while inflation expectations remain anchored.

Private markets in August 2025 split in two: general fundraising is slowing while established managers close oversubscribed vehicles, a “flight to quality” among institutional allocators.

FUND CLOSINGS: • TPG Growth VI: $4.8 billion close, exceeding $4 billion target – Middle Eastern and Asian LP expansion • JMI Equity Fund XII: $3.1 billion raised in just four months – software focus resonating with LPs • Pacific Avenue Fund II: $1.65 billion including €100 million European sidecar – sub-4 month fundraise demonstrates LP confidence • TPG Twin Brook Credit Continuation: $3 billion vehicle led by Coller Capital – largest private credit secondaries transaction to date • Sound Point Strategic Capital III: $1.1 billion first close – doubling predecessor fund size

STRATEGIC M&A ACTIVITY: • Advent/Sapiens: $2.5 billion take-private of insurance software provider • Centerbridge/MeridianLink: $2 billion acquisition just four years post-IPO • PHP/Assura: £1.9 billion healthcare REIT consolidation defeating KKR • J.P. Morgan/Chestnut Carbon: $210 million ESG-focused afforestation financing The compression of fundraising timelines for established managers versus extended periods for emerging managers reflects LP portfolio concentration. Boards of emerging managers now have to show genuinely differentiated propositions.

The UK investment management industry reached £10 trillion in assets under management, according to Investment Association data released August 14. The growth points to continued international confidence in UK asset management despite Brexit.

China’s ETF market is on track to become Asia Pacific’s largest, overtaking Japan by year-end. This shift has significant implications for UK asset managers seeking Asian market exposure and distribution partnerships.

KEY MARKET INDICATORS: • Global M&A surge: $2.6 trillion YTD, highest since 2021, AI-driven consolidation accelerating • InsurTech funding decline: 16.7% QoQ drop despite AI adoption acceleration • Home insurance complacency: 25% of UK homeowners auto-renewing without comparison shopping