HM Treasury and Financial Conduct Authority Regulatory Perimeter Meeting – March 2025
Published 11 April 2025
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Record of the meeting between the Economic Secretary to the Treasury and the Chief Executive of the Financial Conduct Authority (FCA).
1) On 24 March 2025, the Chief Executive (CEO) of the Financial Conduct Authority (FCA) and Economic Secretary to the Treasury (EST) discussed the FCA’s perimeter and the issues set out in the FCA’s Perimeter Report.[footnote 1] This was the fourth annual meeting to discuss issues related to the regulatory perimeter, which defines the financial services activities that require firms to be authorised by the FCA.
2)The EST set out the need for the government to carefully consider the position of the regulatory perimeter, as whether an activity should be regulated is a finely balanced judgement. She noted that the government is committed to reducing the burden of regulation on businesses, while protecting consumers from bad practices and bad actors and ensuring market integrity.
3) The government is strongly committed to the FCA’s secondary international competitiveness and growth objective, and the EST and CEO agreed that work related to the perimeter should also be considered through this lens. The CEO noted that action to bring Environmental, Social and Governance ratings into the perimeter was strongly welcomed by industry. The CEO also reflected on the legislative progress made to bring Buy-Now-Pay-Later (Deferred Payment Credit) activities and the designation of critical third parties into the FCA’s perimeter.
4) The CEO and the EST agreed that it is critical that the Treasury and FCA act quickly to adjust the perimeter where there is a clear case for doing so, and that the FCA and Treasury should communicate clearly with the public, parliament and industry on actions being taken.
5) The CEO raised the following areas for consideration and clarification:
Non-Financial Spread Betting
6) The CEO noted that spread betting products which are based on non-financial indexes, such as sports or political performance, are not within scope of the FCA’s perimeter though there are some calls for them to be within the perimeter. He noted that consumers must be aware of the risks when purchasing such unregulated products. The EST agreed that the government and regulators should work together to ensure consumers understand the regulatory position and associated risks of these products and it should not be assumed that all such products should be regulated.
Consumer Credit Act Reform
7) The CEO raised that some industry stakeholders would like the perimeter to be amended in relation to lending to small businesses, where the level of regulatory protection that a Small and Medium Enterprise (SME) borrower receives is dependent on its legal entity (combined with the loan amount). Currently under the Consumer Credit Act (CCA), lending under £25,000 to sole traders, partnerships with no more than three partners, and unincorporated associations, is in scope of the perimeter. However, lending to limited companies, LLPs and partnerships of more than three persons is out of scope of the perimeter, no matter the loan amount.
8) The EST thanked the CEO for setting this out and noted that the Treasury will shortly be consulting on reforms to the Consumer Credit Act.
Investment Consultants
9) Investment consultants’ activity often sits outside of the FCA’s perimeter. The CEO noted the value of good quality advice from investment consultants in supporting the government’s agenda, for example, on pensions reform.
10) The EST noted that the Treasury will shortly be publishing a response to the Pensions Investment Review consultation and officials will engage with the FCA following publication.
Appointed Representatives
11) The CEO noted that the poor quality of oversight by some principal firms over appointed representatives can be a source of significant consumer harm, and noted that the FCA would welcome progress on next steps on whether wider legislative changes are needed following the Treasury’s Call for Evidence. The EST recognised the need to address potential consumer harm, while also striking a balance with ensuring burdens on firms are proportionate.