Financial Services Update – May 2024


Financial Services Update – May 2024

This page was last updated on May 24, 2024
Our May update has a round-up of the latest FCA developments and guidance notes for the Financial Services sector.


2024 has certainly had a busy start in the financial services sector. To highlight recent changes and developments, we have summarised some notable topics which financial services businesses should be alert to.

Sustainability rules for Portfolio Management

Consultation Paper (CP/24/8) outlines FCA proposals to extend the Sustainability Disclosure Requirements (SDR) to Portfolio Management Services. This is an extension of the anti-greenwashing rules which already apply to fund managers. These new requirements would apply to firms providing services to clients for:

The proposals extend SDR requirements to cover all portfolio management services, including those providing model portfolios. The consultation paper shares this helpful diagram showing the implementation of the SDR rules.

Source: CP24/8: Extending the SDR regime to Portfolio Management Consultation Paper

The naming and marketing rules apply mainly to products offered to retail clients. They also apply when firms use labels or sustainability-related terms. Firms must produce:

… and either publish them or provide them to their clients.

In May 2024, the FCA released finalised guidance (FG24/3). This clarifies the disclosure requirements under anti-greenwashing rules. The guidance contains four key principles

The guidance contains examples and further details, so please see the FG24/3 paper for more information.

Bundling of research and execution

In 2018, the FCA introduced rules that prevented the bundling of research and execution services. The aim was to reduce undisciplined spending on duplicate or low-quality research and avoid opaque charging structures.

These rules were recently rolled back for certain investments, and there is a further consultation paper (CP24/7) that would relax the rules further – albeit with ‘guardrails’ in place.

The consultation is in response to an independent government review on the effectiveness of the UK financial research market by Rachel Kent.

This report led to several recommendations, one of which is the option for buy-side firms to purchase research bundled with execution services.

The requirements on firms in relation to this new option would include them establishing:

This is currently in the consultation phase only, so finalised guidance will follow after responses have been collected.

Social Media

Finalised guidance FG(24/1) reiterates rules for financial promotions through social media channels. Firms are already bound by rules concerning financial promotions. These vary depending on the product, industry and target audience.

The guidance paper’s rules clarify that firms should carefully consider how material on social media is distributed when designing financial promotions. For example, firms should ensure that their original communication still supports consumer understanding, even if it ends up in front of a non-intentional recipient through third-party sharing.

Firms using social media to promote financial services are advised to read the guidance. FG24/1: Finalised guidance on financial promotions on social media (fca.org.uk)

Consumer duty

The new consumer duty legislation came into effect in July 2023. The FCA has published findings of a review into how well firms have implemented these rules. The  full wording is here: Consumer Duty implementation: good practice and areas for improvement | FCA, but in summary, the areas for improvement were:

The article also includes the positive outcomes, so it is a worthwhile read for all firms within scope.

Other news

FCA and Bank of England joint projects

The FCA is working on a long-term project with the Bank of England on Transforming Data Collection (TCD). This project aims to improve all aspects of data collection from firms, including making data points clearer, only collecting relevant information, and improving technology.

The FCA is also consulting with the Bank of England on a Digital Securities Sandbox (DSS) to test how regulation of innovative technologies (such as distributed ledger technology) may work.

Crypto assets are likely to be brought within FCA scope soon, and this is a stepping stone towards that goal. This DSS also applies to the settlement of shares and securities using distributed ledger technology.

Woodford Equity Income Fund (WEIF)

The FCA has published long-awaited findings on link fund solutions (LFS) with respect to the Woodford Equity Income Fund (WEIF).

The FCA found that LFS failed to manage the fund’s liquidity or how easily assets in the fund could be turned into cash so investors could access their money at short notice.

The FCA would have imposed a fine of £50m, but this would have reduced the funds available to compensate investors. Those who invested in the WEIF when it was suspended are starting to receive a share of the up to £230 million redress scheme, which was approved by the High Court in February.


If you would like to discuss any of these developments or have questions for our specialist Financial Services team, please do get in touch.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.

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