Welcome to the May 2025 edition of the Freshfields FS Insights newsletter, which contains a selection of thought leadership related to the financial services industry published over the past month by Freshfields lawyers from around the world, as well as upcoming dates for your diary.

Sustainability

EU officially delays CSRD and CSDDD

On 16 April 2025, Directive (EU) 2025/794 amending the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) was published in the Official Journal of the European Union. The Directive delays the application of sustainability reporting requirements under the CSRD for large companies by two years. It also postpones the transposition deadline for the CSDDD to 26 July 2027 and the its application to the largest companies by one year to 26 July 2028. The European Parliament and Council formally adopted the Directive in April. The EU co-legislators will now seek to agree the substantive parts of the first Omnibus simplification package. For more information, see our blog post.

ESMA guidelines on funds’ names using ESG or sustainability-related terms: implications for greenwashing liability and litigation risks in Germany

In May 2024, the European Securities and Markets Authority (ESMA) published its guidelines on funds’ names using ESG or sustainability-related terms. The guidelines have applied since 21 November 2024 for new funds and will apply from 21 May 2025 for pre-existing funds. For an overview of the scope and content of the guidelines, their potential impact on civil liability and litigation risks for financial institutions in Germany, and potential risk mitigation measures, see our blog post.

The Austrian Financial Market Authority’s new Guide on Managing Sustainability Risks

On 31 March 2025, the Austrian Financial Market Authority published its updated Guide on “Managing Sustainability Risks” (Leitfaden zum Umgang mit Nachhaltigkeitsrisiken). The Guide aims to establish a mutual approach to adequately map sustainability risks as part of risk management in the financial sector. In addition to updates reflecting current regulatory and methodological developments, the Guide has been expanded to include biodiversity risks and transition planning, and puts a stronger focus on greenwashing and litigation risks. It provides a very user-friendly overview of specific tools and methods to evaluate sustainability risks. For more information, see our blog post.

Diversity

BaFin's general ruling on diversity reporting requirements for German banks

On 27 March 2025, the German Federal Financial Supervisory Authority (BaFin) published a general ruling requiring significant German CRR credit institutions to submit to Deutsche Bundesbank detailed information on the diversity of the composition of their management and supervisory boards. The general ruling complements existing German corporate and regulatory law disclosure and governance requirements in relation to diversity and underscores that the topic is gaining increased attention from EU regulators. For more information, see our blog post.

Motor finance

Motor Finance hearing in the Supreme Court

The UK Supreme Court heard the landmark case of Johnson v FirstRand Bank Limited at the beginning of April. The case is linked with Wrench v FirstRand Bank Limited and Hopcraft v Close Brothers Limited—all three cases were heard together by the Supreme Court. The judgment, which the Court indicated should be expected in July, could be a pivotal moment for the motor finance sector and the broader financial services industry. The Financial Conduct Authority (FCA) has said it will confirm within six weeks of the judgment if it is proposing a redress scheme and if so how. For a summary of key points from the hearing, see our blog post.

Enforcement

The UK FCA’s first fine imposed on a Recognised Investment Exchange

On 19 March 2025, the FCA published a final notice and imposed a penalty of £9.2 million on the London Metal Exchange (LME). This is the first enforcement decision relating to a Recognised Investment Exchange (RIE) and follows the FCA’s previously announced investigation of price volatility in 3-month nickel contracts on 7 and 8 March 2022. Although RIEs have different regulatory requirements from other authorised firms, the FCA’s findings on governance and decision-making in this final notice are applicable to a wider range of firms. For more information, see our blog post.

German elections

The coalition agreement of the new German government - what’s in it for financial services?

On April 9, 2025, the Christian Democratic Union (CDU), Christian Social Union (CSU) and Social Democratic Party (SPD) parties unveiled their coalition agreement, setting out the plans of the new government for the next four years. See our blog post for a summary of the eight top takeaways for financial services. For a comprehensive look at the 2025 German election, please visit our dedicated election hub.

Asset management

Reforming fund regulation in the UK: HM Treasury and FCA proposals for regulating alternative investment fund managers 

The future for alternative investment fund managers (AIFMs) in the UK became a little bit clearer on 7 April 2025 when HM Treasury published a consultation paper setting out its plans to streamline the regulatory framework. On the same day, the FCA published a call for input, setting out its proposed approach to regulating AIFMs within the framework proposed by HM Treasury. The overall aim of HM Treasury’s consultation paper and the FCA’s call for input is to foster growth in the asset management sector and the UK economy, by streamlining the regulatory requirements for AIFMs while maintaining core protections for consumers and markets. For more information, see our blog post.

Foreign direct investment and national security regimes

Comparing the key features of the National Security & Investment Act to other FDI regimes

Re-examination of the UK’s investment screening regime under the National Security and Investment Act 2021 (NS&I Act) is both timely and appropriate. The government’s industrial strategy has the promotion of investment at its heart and many of the government’s target sectors for investment are also identified as key sectors for screening under the NS&I Act. International benchmarking of foreign direct investment and national security screening regimes (FDI regimes) across various jurisdictions underlines that while the NS&I Act provides investors with a comparatively predictable regime, it casts a very wide net over investment activity compared to other geographies that are competing for investment. It is viewed by international investors as an additional cost of doing business in the UK, which can seem at odds with the pursuit of growth. In this context, Freshfields LLP and TheCityUK have undertaken an analysis of FDI regimes across the UK and ten other jurisdictions to identify how the UK government can improve its regime under the NS&I Act by drawing upon best practice from other regimes. For more information, click here.

TheCityUK International Conference 2025

Freshfields LLP once again sponsored TheCityUK’s International Conference, which took place in London and online on Thursday 24 April 2025. The conference, also sponsored by State Street, brought together senior leaders from across the financial and related professional services industry, policymakers and regulators. The panel sessions, conversations, and keynote speeches discussed the turbulent global geopolitical landscape; trade relationships; challenges and opportunities in the current market for business; and how the UK can position itself to ensure it remains a world-leading international financial centre. Participants included Freshfields partners Claire Wills, Emma Rachmaninov and Cyrus Pocha. For more information, including recordings from throughout the day, click here.

Dates for your diary

6th Digital Financial Services Forum: Open Finance in Europe

In co-operation with the Institute for Law and Finance at the Goethe University Frankfurt am Main and the Center for Financial Studies, Freshfields will be hosting the 6th Digital Financial Services Forum. This year's topic is "Open Finance in Europe". The conference will take place on Thursday 15 May 2025 between 10am and 1.30pm CEST in a virtual format. Attendance is free of charge. This years’ forum will focus on the proposed Financial Data Access (FIDA) framework, which is currently in trilogue negotiations. Is there a demand for the open finance regime proposed by FIDA, what new business models would it enable, and is now the right time for additional regulation for the financial sector? For more information about this event, please contact Azam Khan or Kiki Kellermann.

UK Banking Litigation Webinar: Recent Cases and Emerging Risks 

In our next banking litigation update webinar, we will draw together the most important cases and developments in the UK over the last six months, and discuss how those themes are likely to develop, particularly in light of the recent market turmoil.

Contractual interpretation is likely to be key over the next few months, especially as it relates to force majeure and material adverse change clauses, and the way in which banks’ duties to exercise discretions may be constrained. There have been several recent cases which are relevant here, including in relation to the way that the Braganza duty operates. APP fraud is likely to remain a key concern, and we will cover the Court’s recent dismissal of a retrieval duty in these circumstances, and extent to which arguments about a duty of this nature may still be raised by victims of APP fraud. Finally, the issue of consumer redress is receiving significant attention in both a regulatory and litigation context, and the recent cases highlighting the FCA’s decision-making processes in the context of consumer schemes are likely to shape the redress landscape going forward.

Our live one hour webinar will be at 1pm London time on Thursday 22 May 2025 in which a panel of lawyers from the Freshfields Financial Institutions Disputes Group will discuss these recent judgments, as well as cases to watch out for in the near future. To register, click here.

Freshfields seminar: Fairness in regulatory decision-making

We are hosting an in-person event for clients in London at 5pm on 3 June 2025 on ‘Fairness in Regulatory Decision-making’. There is a super lineup for this event, featuring distinguished speakers from the FCA and the Regulatory Decisions Committee (RDC) as well as an alumnus of the US Securities and Exchange Commission (SEC). Therese Chambers, Joint Executive Director of Enforcement at the FCA, Alison Potter, Chair of the RDC, and Melissa Hodgman, former Acting Director of the SEC, will cover how to achieve fairness in decision-making, from the perspective of their respective organisations. Please email Nicole Yim if you would like to attend.