THE GRC NAVIGATOR
Your Bi-Weekly GRC Intelligence Briefing
Issue 6 | 01 August 2025
Executive Summary
FCA Enforcement Reaches £45M in Major Actions Against H2O and Barclays
The Financial Conduct Authority has demonstrated unprecedented enforcement vigor with two major actions totaling over £45 million in penalties. On July 25, the FCA fined Jean-Noel Alba, former deputy CEO of H2O AM LLP, £1.05 million and banned him permanently from financial services for deliberately misleading the regulator during due diligence investigations.
The H2O case represents a significant escalation in personal accountability, with the FCA determining that Alba lacked integrity after he provided false information about the firm’s due diligence processes for investments in Windham Capital associates. This action signals the regulator’s willingness to pursue senior executives directly for compliance failures.
Concurrently, on July 16, the FCA imposed a £42 million penalty on Barclays Bank UK PLC and Barclays Bank PLC for separate failures in financial crime risk management, specifically relating to WealthTek and Stunt and Co arrangements. The penalty underscores the regulator’s continued focus on anti-money laundering controls and transaction monitoring systems.
Key implications:
• Senior executives face increased personal liability for misleading regulators
• Financial crime compliance remains a top enforcement priority
• Firms should review their senior management accountability frameworks
• Due diligence processes require enhanced documentation and oversight
Regulatory Updates
FCA Accelerates Authorisation Processes Under Growth Initiative
The FCA announced on July 15 its commitment to faster authorisation targets as part of broader UK growth and competitiveness measures. The regulator plans to speed up processes for firms and individuals seeking authorisation, recognising the potential to support UK economic growth. Statutory deadlines for FCA and PRA decisions will be shortened, with enhanced service standards for applicants. This represents a significant shift from previous cautious approaches to authorisation, with implications for market entry strategies and competitive positioning.
Key implications:
• Reduced time-to-market for new financial services entrants
• Enhanced predictability for authorisation timelines
• Potential for increased competition in regulated sectors
Mortgage Rule Review: Comprehensive Market Liberalisation
On July 22, the FCA implemented Policy Statement PS25/11, delivering the most significant mortgage rule simplification in over a decade. The changes eliminate barriers to remortgaging with new lenders, reduce costs associated with term reductions, and introduce greater flexibility in customer engagement models. The reforms specifically address the “mortgage prisoner” problem and enable more efficient capital allocation in residential lending markets.
The FCA’s Discussion Paper DP25/2 examines the future of the mortgage market, signaling potential further reforms. The paper considers how regulation can better serve different consumer segments and support UK economic objectives, with responses due September 19.
Market impact analysis:
• Estimated £200-400 reduction in average remortgage costs
• Potential 15-20% increase in remortgage activity
• Enhanced competition among mortgage providers
• Simplified advice frameworks reducing compliance burden
Capital Markets Reforms Gain Momentum
Enhanced PEP Guidance Framework
On July 18, the FCA issued comprehensive final guidance on the treatment of Politically Exposed Persons (PEPs), addressing long-standing industry concerns about disproportionate restrictions. The guidance clarifies risk-based approaches to PEP categorisation, provides practical examples of proportionate due diligence, and establishes clearer parameters for ongoing monitoring requirements.
The guidance specifically addresses domestic PEPs, family members, and close associates, providing firms with greater certainty in their risk assessment frameworks. The main points are summarised below:
1. Domestic PEPs – Lower Risk by Default
The Guidance now explicitly incorporates a legal change from January 2024: the starting point for UK-based (domestic) PEPs, their family members, and known close associates is that they present a lower risk than foreign PEPs. This default can only be overridden by clear, documented additional risk factors unrelated to their PEP status.
2. Clarification of Who is a PEP
• The Guidance clarifies that in the UK context, Non-Executive Board Members (NEBMs) of civil service departments are not to be treated as PEPs unless they meet the definition in another capacity. This is intended to prevent disproportionate scrutiny for individuals with advisory, non-executive roles.
• Only individuals holding truly prominent public functions should be considered as PEPs. This excludes local government officials, most senior civil servants beneath permanent/deputy secretary level, junior military officials, etc.
3. Senior Management Approval – More Flexibility
Firms previously needed all PEP relationships to be signed off at a minimum by their Money Laundering Reporting Officer (MLRO). The updated Guidance now allows more flexibility: other equivalent senior managers may approve PEP relationships, provided the MLRO retains oversight of the process (especially for riskier relationships). This change addresses industry concerns about MLRO independence and supports a proportionate, risk-based approach.
4. Minor Amendments
The FCA removed outdated references to EU law or guidance that no longer applies in the UK.
General language has been updated to improve clarity and alignment with the most recent legislative framework.
5. Risk-Based Approach Reaffirmed
• The updated Guidance emphasizes a case-by-case, risk-sensitive approach for PEP assessments—domestic PEPs should rarely be treated as high risk unless there are compelling, documented reasons.
• Family members and close associates are not PEPs by default; they are subject to enhanced due diligence only based on proximity to a PEP or other objective risk factors.
• The Guidance reinforces that simply meeting the PEP definition is not a legitimate basis for refusing or terminating banking and financial relationships in the absence of other corruption or money laundering signals.
UK-Swiss Financial Services Integration
CROSS-BORDER
Buy Now Pay Later Regulatory Framework
Crypto Enforcement Escalation
The FCA’s July 17 enforcement action seizing seven crypto ATMs and arresting two individuals demonstrates increasingly proactive crypto regulation. The investigation targeted suspected unauthorised cryptoasset exchange operations and money laundering activities, marking a shift from reactive to preventive enforcement.
The enforcement signals the FCA’s readiness to act decisively against unauthorised crypto operations while developing comprehensive regulatory frameworks.
PRA Developments
Systemic Risk Framework Overhaul: O-SII Buffer Modernisation
The PRA’s July 29 announcement of updated O-SII buffer rates represents the culmination of a comprehensive review by the Financial Policy Committee. The decision to index O-SII buffer rate thresholds creates dynamic adjustment mechanisms tied to economic indicators, replacing static rate structures that had remained unchanged since implementation.
The framework affects ring-fenced banks and large building societies, with buffer rates now automatically adjusting based on systemic importance metrics. This creates more responsive capital requirements that reflect real-time risk levels rather than historical assessments. The changes are expected to impact capital planning for major UK institutions, requiring enhanced forecasting capabilities and stress testing frameworks.
Technical implications:
• Dynamic capital requirements based on systemic importance indicators
• Enhanced stress testing requirements for affected institutions
• Potential capital releases for some institutions during benign periods
• New reporting obligations for systemic risk monitoring
Insurance Market Competitiveness: ISPV Framework Revolution
The PRA’s July 24 publication of Policy Statement PS9/25 delivers the most significant Insurance Special Purpose Vehicle regulatory reform since Brexit. The changes reduce authorisation timelines from 12-18 months to 6-9 months, introduce risk-based approval processes, and align UK standards with international best practices.
The reforms specifically target insurance-linked securities markets, catastrophe bonds, and alternative risk transfer mechanisms. Enhanced operational flexibility allows for more efficient capital structures while maintaining prudential safeguards. The PRA estimates these changes could increase UK ISPV authorisations by 40-60% annually, strengthening London’s position as a global insurance hub.
Market positioning benefits:
• Accelerated time-to-market for insurance-linked securities
• Enhanced competitiveness versus Bermuda and Ireland
• Simplified approval processes for established structures
• Expanded eligible investment categories for ISPVs
Cross-Border Enforcement Precedent: Barents Reinsurance Action
The PRA’s £1.79 million penalty against Barents Reinsurance S.A. London Branch establishes critical precedent for enforcement against third-country firms operating under temporary permissions. The action targeted governance failures, late regulatory reporting, and inadequate audit response procedures spanning 2021-2023.
This enforcement represents the first major penalty against a Cayman Islands reinsurer’s UK operations and signals the PRA’s willingness to pursue cross-border accountability. The case highlights specific compliance failures including delayed submission of regulatory returns, inadequate senior management oversight, and insufficient remediation of audit findings.
Enforcement implications:
• Enhanced scrutiny of third-country branch operations
• Stricter governance requirements for temporary permissions
• Mandatory reporting timeline enforcement
• Senior management accountability for overseas entities
Digital Infrastructure Enhancement: Payment Systems Modernisation
The PRA’s July 29 consultation on extending RT2 and CHAPS settlement hours represents phase one of comprehensive payment infrastructure modernisation. The proposals include extended settlement windows, enhanced cross-border connectivity, and improved liquidity management capabilities.
The technical enhancements target settlement efficiency, operational resilience, and international competitiveness. Extended hours would align UK payment systems with global markets, reducing settlement risks and improving capital utilisation. The consultation period extends through September, with implementation planned for Q2 2026.
Senior Management Accountability Framework Refinement
The PRA’s participation in the July 15 joint consultation on SMCR reform represents a recalibration of senior management accountability. The proposals include removing certification requirements from legislation, introducing greater proportionality for smaller firms, and streamlining approval processes.
Phase 1 reforms focus on immediate efficiency gains without legislative changes, while Phase 2 will require primary legislation. The PRA estimates compliance cost reductions of 20-30% for smaller institutions while maintaining accountability standards for systemically important firms.
Fund Launches & Capital Raises
Stone Point Achieves Record $11.5B Trident X Close [INFO]
Stone Point Capital completed the final close of Trident X, raising $11.5 billion and marking the firm’s largest fundraise to date. The fund surpassed both its original $9 billion target and hard cap, demonstrating exceptional investor confidence in financial services private equity strategies. The oversubscription reflects continued institutional appetite for specialised sector expertise, particularly in fintech, payments, and insurance technology investments.
17Capital Closes Strategic Lending Fund 6 at $5.5B
Dedicated NAV finance provider 17Capital achieved final close of Strategic Lending Fund 6, raising approximately $5.5 billion including co-investment and affiliated vehicles. The fund targets the growing market for net asset value financing, providing liquidity solutions to private equity investors. The successful raise underscores institutional recognition of NAV financing as a distinct asset class, with growing demand for portfolio liquidity solutions.
Blackstone Infrastructure Secondaries Reaches $5B
Blackstone’s Strategic Partners unit raised approximately $5 billion for its fourth infrastructure secondaries vehicle, nearing final close according to market sources. The fund capitalises on growing secondary market activity in infrastructure assets, as institutional investors seek liquidity and portfolio rebalancing opportunities. The raise reflects maturation of infrastructure secondaries markets and increasing acceptance of these strategies among pension funds and sovereign wealth funds.
European Mid-Market Excellence: Key Fundraising Successes
IK Partners Secures €2B for Small Cap IV: European private equity firm IK Partners closed its fourth Small Cap fund at its hard cap, with €2 billion in commitments. Notably, 80% of capital came from existing investors, demonstrating strong LP satisfaction with previous fund performance. The fund targets Northern European small-cap opportunities with enterprise values of €50-400 million.
Pollen Street Capital Exceeds Targets with €2B Fund V: UK-based alternative asset manager Pollen Street Capital closed its flagship Private Equity Fund V with €1.5 billion in commitments, plus an additional €500 million in co-investment capital. The oversubscribed fund targets European mid-market businesses, reflecting continued investor confidence in the firm’s operational value creation approach.
Asia-Pacific Expansion Continues with Record Raises
EQT Secures $11.4B for Asia Buyout Strategy: Swedish private equity powerhouse EQT raised $11.4 billion for its latest Asia-focused buyout vehicle, with fundraising expected to close by year-end against a hard cap of $14.5 billion in 2026. The fund represents one of the largest Asia-focused private equity vehicles, targeting growth opportunities across technology, healthcare, and consumer sectors.
Glenwood Private Equity Hits $1.1B Korea Fund: Seoul-based Glenwood Private Equity closed its Fund III at its hard cap of $1.1 billion, focusing on upper middle-market corporate carve-out opportunities in South Korea. The fund demonstrates continued international investor interest in Korean market opportunities despite geopolitical uncertainties.
Private Credit Market Evolution Accelerates
Pantheon Credit Opportunities III Exceeds Targets: Pantheon completed final close of PCO III, with approximately $2.2 billion in commitments, exceeding initial targets by over 2.5x. The opportunistic credit secondaries programme capitalises on market dislocations and distressed situations, reflecting growing institutional allocation to alternative credit strategies.
Third Point Launches Insurance Solutions Fund: New York-based hedge fund Third Point held a $400 million first close for its Insurance Solutions Fund I, marking the firm’s first dedicated private credit strategy for insurance companies. The fund addresses growing demand from insurers for yield enhancement and portfolio diversification solutions.
Flow Capital Partners Asia Credit Initiative: Hong Kong-based Flow Capital Partners launched a $125 million Asia-focused credit fund, expanding beyond its initial China and Hong Kong focus. The fund targets mid-market lending opportunities across Southeast Asia, reflecting growing demand for alternative financing solutions in the region.
Co-Investment Strategies Gain Institutional Traction
Neuberger Berman Surpasses Co-Investment Target: Neuberger Berman closed NB Strategic Co-Investment Partners V with over $2.8 billion in commitments, significantly exceeding its $2.25 billion target and predecessor fund size. The fund provides direct co-investment opportunities alongside the firm’s private equity strategies, reflecting institutional preference for fee-efficient exposure to private markets.
Market Infrastructure and Continuation Trends
Continuation Fund Activity Reaches Record Levels: Private equity exits via continuation funds totaled $41 billion in H1 2025, representing a record figure accounting for 19% of all industry exits. This trend reflects managers’ strategies to retain high-performing assets while providing liquidity to limited partners, fundamentally reshaping private equity exit markets.
Ardian Access Platform Launch: Global private investment firm Ardian launched Ardian Access SICAV-RAIF, an evergreen vehicle domiciled in Luxembourg targeting secondary and co-investment opportunities. The platform reflects growing institutional demand for continuous investment vehicles providing private market exposure without traditional fund commitment cycles.
Institutional Allocation Trends
CalPERS Private Equity Expansion: CalPERS, the largest US public pension plan, announced plans to deepen private equity exposure following its best annual performance since 2019. The move underscores growing institutional conviction in private markets despite ongoing valuation and liquidity concerns, potentially influencing allocation decisions across the broader pension fund sector.
UHNW Investor Appetite Remains Strong: Research published by Connection Capital indicates ultra-high net worth and high-net worth investors maintain strong appetite for private market investments despite reduced exit activity. The findings suggest sustained demand for alternative investments among sophisticated individual investors, supporting continued fundraising momentum across private market strategies.
Enforcement Watch
Unauthorised Investment Scheme Action
The FCA initiated High Court proceedings on July 29 over an alleged £23 million unauthorised collective investment scheme involving consumer investments in static homes. The action highlights regulatory focus on unauthorised investment promotion and consumer protection.
Financial Crime Compliance Scrutiny Continues
Market Developments
SMCR Reform Consultations Launch
Financial Ombudsman Service Reforms
HM Treasury consulted on reforms to the Financial Ombudsman Service aimed at preventing compensation delays and providing greater predictability for innovation. The reforms seek to modernise the redress system and prevent it becoming overwhelmed.
Continuation Funds Hit Record Levels
Regulatory Calendar
- 8 August: Deadline for responses to EU Commission consultation on CRR equity exposures
- 15 August: Deadline for comments on EU benchmark administrator fees Delegated Regulation
- 20 August: FCA operational resilience implementation review comments due
- 30 August: PRA consultation responses due on RT2 and CHAPS settlement hours
- 8 September: EU Commission consultation closes on CRR legislative programmes guidance
- 15 September: FCA discussion paper responses due on future of mortgage market
- 30 September: HKMA Phase 2 mandatory reference checking scheme implementation
September 2025
- 14 October: HMT consultation closes on National Security and Investment Act changes
- 31 October: SMCR reform consultation responses due to HMT, FCA and PRA
Question of the Week
As the FCA escalates enforcement against senior executives with the H2O case representing a new benchmark for personal accountability, how should firms recalibrate their governance frameworks to protect both institutional and individual stakeholders from regulatory exposure while maintaining operational effectiveness?
Insight: The Personal Accountability Revolution in Financial Services Regulation
The FCA’s £1.05 million fine and lifetime ban of H2O’s deputy CEO signals a shift toward individual accountability that extends beyond the Senior Managers & Certification Regime. This enforcement action demonstrates that misleading regulators—regardless of intent or materiality—now carries career-ending consequences. The decision to pursue personal liability for compliance failures represents regulatory evolution from institutional penalties toward executive accountability models seen in criminal law. For senior executives, this creates a new risk paradigm requiring enhanced legal protections, more rigorous documentation processes, and potential improvements to how firms structure interaction with regulators. The message is clear: personal integrity is now the primary regulatory currency, and the cost of getting it wrong is high.