Welcome to the July 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. If you would like more information regarding any of these developments, please get in touch with your usual Freshfields contact.

UK competitiveness and growth

How (not) to regulate for growth: House of Lords committee report on the UK regulators’ secondary international competitiveness and growth objective

On 13 June 2025, the House of Lords Financial Services Regulation published its report on the secondary international competitiveness and growth objective for the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Taking stock almost two years after the secondary objective entered into force in August 2023, the Report sets out the Committee’s assessment of the current position and outlines its recommendations to the regulators and the government to maintain the attractiveness of the UK as a place for investment and to ensure that the regulators can facilitate growth in the wider economy. Key criticisms by the Committee include: an overly risk-averse culture at the UK regulators, disproportionate capital requirements and compliance burdens, operational inefficiency, and a lack of certainty and predictability of regulatory requirements. For a high level summary of some of the key points, see our blog post. For a more detailed analysis, see our briefing.

The UK’s new Industrial Strategy: A 10-year vision for growth

On 23 June 2025, the UK Government published its long-awaited new Industrial Strategy (the Strategy). The Strategy is a 10-year plan to significantly increase business investment in the UK in eight high-growth sectors, including financial services, by making it quicker and easier for businesses to invest and providing them with the certainty and stability needed for long-term investment decisions. For more information, see our blog post.

Bank resolution

A political breakthrough: EU reaches deal on bank resolution framework

On 25 June 2025, the Council of the European Union and the European Parliament reached a political agreement to reform the EU's crisis management and deposit insurance (CMDI) framework as part of the trilogue negotiations. The CMDI package comprises revisions to the Bank Recovery and Resolution Directive, the Single Resolution Mechanism Regulation and the Deposit Guarantee Schemes Directive. It was originally unveiled by the European Commission on 18 April 2023, and the trilogue positions of the EU bodies were published in March 2025. The agreement between the Council and the European Parliament to strengthen the EU's crisis management framework is a pivotal development for the banking sector and marks a further step to complete the EU’s banking union. By addressing the challenges faced by small and medium-sized banks and providing a more robust resolution mechanism, the CMDI reform aims to enhance financial stability and depositor protection across the EU. For more information, see our blog post.

Cryptoassets

FCA proposes rules for stablecoin issuers and cryptoasset custodians
  
On 28 May 2025, the FCA published a consultation setting out its proposed rules for the two newly regulated cryptoassets activities: the issuance of qualifying stablecoins and the safeguarding of qualifying cryptoassets (CP25/14). These proposals form part of the UK’s broader regulatory roadmap for digital assets and follow the Treasury’s near-final statutory instrument published in April 2025, which amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and, among other things, brings the activities of issuing qualifying stablecoins and safeguarding qualifying cryptoassets within the UK regulatory perimeter (see our briefing for more information). Together with Consultation Paper 25/15, which outlines the prudential requirements proposed for certain cryptoasset firms (as described below), CP25/14 represents a significant step in the FCA’s efforts to bring clarity and create a predictable framework for the regulation of cryptoassets in the UK. For more information, see our blog post.
  
FCA consults on proposed prudential rules for cryptoasset firms that issue qualifying stablecoins and safeguard qualifying cryptoassets
  
On 28 May 2025, the FCA also published a consultation paper outlining its proposed prudential rules for firms that issue qualifying stablecoins and safeguard qualifying cryptoassets (CP25/15). Interestingly, CP25/15 also sets out a glimpse of the future as it will apply to other types of solo regulated entities as well. Amongst other plans detailed in CP25/15, the FCA has notably proposed to:

• simplify the existing MIFIDPRU framework by introducing an integrated prudential sourcebook (referred to as COREPRU), which would then be supplemented by sector-specific sourcebooks (including a sourcebook specifically for cryptoasset firms); and
• introduce (i) an own funds requirement and (ii) liquid assets requirement for in-scope cryptoasset firms, both of which appear to be closely aligned with the equivalent MIFIDPRU requirements.

For more information, see our blog post.

Sustainable finance and ESG

CSRD and CSDDD at a crossroads: The Council’s push for revisions

On 23 June 2025, the Council of the European Union reached a highly anticipated agreement on the content part of the sustainability-related Omnibus simplification proposal. After agreeing (at record speed) to stop the clock on the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) taking effect, giving companies extra time to comply (see here), the EU co-legislators have turned their attention to the substantive content of these directives, and the changes proposed by the EU Commission in the main Omnibus. Representatives of the 27 Member States of the EU have progressed negotiations in the Council under the leadership of Poland, who hold the Presidency of the Council for the first semester 2025. The EU Member States have reached a ‘general approach’, i.e. an agreed position setting out their proposal on the Omnibus package. While the Council recognises that the Commission’s proposal was a good start, they have put forward a number of additional amendments aimed at further simplifying the rules, while trying to keep most of the EU sustainability objectives enshrined in the directives. Our blog post outlines the Council’s key changes proposed as well as the next steps at EU level to reach a final agreement on the Omnibus proposal.

UK progresses long-awaited updates to rules on sustainability reporting, assurance and climate transition plans

Following a long hiatus since the announcement at COP26 in Glasgow in late 2021, the UK has commenced formal processes toward the adoption of reporting standards aimed at making the UK the “sustainable finance capital of the world”. The UK Government has launched three linked consultations on key sustainability and transparency reporting proposals: (i) the long awaited ISSB-aligned “UK Sustainability Reporting Standards” (UK SRSs); (ii) mandatory disclosure of climate transition plans; and (iii) a new proposal to establish a voluntary sustainability assurance registration regime. These are significant milestones and provide a much-needed sense of direction from the Government on its domestic sustainability reporting frameworks. In other welcome news, the Government also indicated that it will consult on streamlining the UK’s non-financial reporting framework, which will focus on updating the current regimes and removing “redundant and duplicative requirements”. Key highlights of each of the proposals are outlined in our blog post. Keep watch for future blog posts as we take a deeper dive into what these changes may mean for different sectors and businesses.

FRC launches new UK Stewardship Code 2026

On 3 June 2025, the Financial Reporting Council (FRC) published a revised UK Stewardship Code 2026 (replacing the UK Stewardship Code 2020), and accompanying draft guidance (which it intends to finalise in the Autumn). The revised code, effective from 1 January 2026 (with 2026 treated as a transition year for existing signatories) is the result of an extensive consultation launched in November 2024. It aims to refine the regulatory framework to promote long-term sustainable value creation for clients and beneficiaries while reducing reporting burdens for its nearly 300 signatories, who collectively have approximately £50 trillion in assets under management (AUM). The FRC describes the updates to the Code as “evolutionary and not revolutionary”. The focus is on a move away from ‘tick-box’ reporting towards a more individualised approach to stewardship and long-term sustainable value creation. For more information, see our blog post. These developments follow from the FRC’s publication of several immediate revisions to the 2020 Code in July 2024 (for further detail on these revisions, please see our previous blog post here).

Securities and Exchange Commission

SEC changes course on priorities, unsurprisingly continues enforcing the FCPA, and selects new agency leaders

Continuing its trend of reversing course from the last Administration, and with a nod to promoting innovation, the U.S. Securities and Exchange Commission (SEC or the Commission) announced on 12 June 2025 that it planned to formally withdraw 14 Gensler-Era proposed rules as of 17 June 2025. The Commission explained that it does not intend to issue a final rule with respect to any of the fourteen notices of proposed rulemaking, all of which were issued between March 2022 and November 2023. Meanwhile, the Department of Justice (DOJ)’s new Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act (FCPA), issued on 9 June 2025, outlines the areas of focus for enforcement, which reflect a cross-border focus especially around China-based issuers, areas in which the Administration feels there has been unfair competition from abroad, or in which it perceives national security interests to be at stake. The SEC, which has its own FCPA unit, has previously indicated that it will follow the Justice Department’s lead regarding a pause in FCPA enforcement, so it is worth paying close attention to DOJ’s new guidance for an indication as to the SEC’s likely approach to FCPA enforcement. These changes come as SEC Chair Atkins named new leaders to key divisions within the agency. The shifts in SEC priorities and personnel signal potential changes in various areas affecting issuers, investment advisers, and other market participants. For more information, see our blog post.

SEC revisits foreign private issuer eligibility

On 4 June 2025, the SEC published a Concept Release on Foreign Private Issuer Eligibility, inviting public comment on potential amendments to the definition of “foreign private issuer” (FPI). The Concept Release represents a preliminary step in rulemaking; specific proposals for rules may come at a later date. The Concept Release, which received unanimous SEC commissioner support, signals a re-evaluation of the decades-old regulatory framework for non-U.S. issuers. Prompted by its own analysis showing that most FPIs now trade primarily in U.S. markets and are increasingly incorporated in jurisdictions with different disclosure requirements, the SEC is questioning whether the foundational assumptions behind FPI accommodations remain valid. Rather than proposing a specific rule, the SEC has initiated a broad dialogue, inviting public comment on over 65 questions and any aspect of foreign issuer regulation needing improvement. The potential consequences are significant. For more information, see our blog post.

What to expect from SEC enforcement

In episode #3 of our Eureka podcast series on capital markets, partners and former senior SEC officials Melissa Hodgman and Erik Gerding share insider perspectives on what to expect from SEC enforcement, including:

• Direction of travel for key areas such as crypto, fraud, individual liability, China, ESG and insider trading
• Insights into personnel and priorities changes at the agency and what this means for enforcement
• Advice for Boards, executives and in-house counsel on how to manage the swirling currents of the new SEC leadership

You can access the podcast here.

Prudential regulation

Road to CRD 6 – the harmonisation of red tape: EBA’s draft RTS on qualifying holding procedures

Directive (EU) 2024/1619 (commonly referred to as CRD 6) is part of the so-called EU Banking Package. It introduces, among other things, requirements in relation to the establishment of third-country branches (as discussed in our previous blog post), ESG-related requirements (as discussed in our previous blog post) and new approval and notification requirements in the context of M&A in the financial services sector (as discussed in our previous blog post). An often overlooked aspect of CRD 6 is the instruction to the European Banking Authority (EBA) to develop draft regulatory technical standards (RTS) to specify the list of minimum information to be provided in the context of qualifying holding procedures. Against this background, on 20 June 2025, EBA has published a consultation on draft RTS, the aim of which is to ensure a European harmonised approach of the prudential assessment of acquirers of qualifying holding in credit institutions. Our blog post provides an overview of the key aspects of the draft RTS and compares it to the existing Joint Guidelines on the prudential assessment of acquisitions and increases in qualifying holdings in the financial sector.

Operational resilience

DORA and critical ICT third-party service providers: the first round of “critical” designations approaching

The EU’s Digital Operational Resilience Act (DORA), which became applicable in January this year, has elevated ICT regulation in the financial sector to a new level. A key feature is its elaborate ICT third-party risk framework which has not only refined ICT risk management obligations for banks and other financial entities. It has also introduced direct oversight for certain tech companies and ICT vendors whose services are designated as being critical to the financial sector by the European Supervisory Authorities (ESAs). Oversight over such “Critical ICT Third-Party Service Providers” or “CTPPs” will be insistent and extensive with high scrutiny on systems, security, governance and resilience. The oversight will be in addition to the cyber security regime established under the updated Network and Information Security Directive (NIS2 Directive) where CTPPs may be in scope, although the focus is on ICT risk exposure to financial entities and the authorities are required to consult and align to avoid regulatory duplication. ICT service providers that meet DORA’s criticality criteria should prepare for a shift comparable to being regulated themselves and financial entities should closely monitor the developments affecting their service providers considering that their oversight may have regulatory consequences for them. In light of the current first round of critical assessments (which were recently discussed in a webinar by the ESAs), our blog post gives an update on the state of play of the designation process and an outlook on how the new oversight regime will complement and tie into financial entities’ ICT risk management.

Capital markets

PISCES Q&A – key features of the world’s first regulated crossover market

The FCA has now published its final rules for prospective operators of the new PISCES platforms (Private Intermittent Securities and Capital Exchange System), which will run for five years in a regulatory sandbox. While the FCA rules set out a framework for how PISCES platforms will work, much of the detail is left to operator discretion, so the rules that apply to participating companies on each PISCES are likely to vary between platforms. The LSE will publish the rules for its planned PISCES – the Private Securities Market – in the coming weeks/months. Ahead of that, our blog post sets out a quick reminder of some of the key features of this new type of private securities market, where shares in private companies can be traded during intermittent trading events, with access to the full distribution infrastructure of the public markets through open or permissioned auctions.

Securitisation

Securitisation: diversification, divergence and digitalisation – themes for the European securitisation market over the next 12 months

In an ever changing market, what trends are we seeing and what developments are on the horizon? 2025 is set to be a key year for regulatory change, both in the EU and in the UK. Ongoing initiatives to revamp the securitisation regime will undoubtedly impact the industry due to the fundamental nature of the changes which may be introduced, in particular in relation to securitisation’s capital treatment, disclosure requirements and due diligence requirements. Meanwhile, the traditional archetypal dominant asset classes in securitisation have started to share ground with more varied and innovative underlying assets – bundled under the extremely broad umbrella of a new asset class: esoteric. In addition, digitalisation will continue to bring changes to the securitisation industry. Our briefing considers themes for the European securitisation market over the next 12 months, including diversification of asset classes and investor base, divergence between the EU and UK regimes, and digitalisation.

Quick guide: The regulation of private securitisation in the EU and UK

European securitisation transactions come in many different shapes and sizes. Not all securitisations involve the issuance of publicly traded securities as seen in the public ABS markets. In the private space, parties are sometimes surprised that their financing falls within the scope of the EU or UK securitisation regulations, especially when it does not fall within the scope of other risk retention regimes. Our quick guide looks at when to consider if your transaction will be viewed as a securitisation by EU or UK financial services regulators, what is meant by “private securitisation” under these regimes, and what it means for your transaction if it does fall within the scope of the rules applicable to private securitisations.

Policy progress for the EU securitisation market? What you need to know about the latest regulatory proposals

On 17 June 2025, the European Commission published proposals to amend the EU regulatory framework for securitisation. The proposals have already made headlines, after draft versions were leaked earlier in June, but we now have the official texts. Reflecting a wider shift towards easing regulatory burden to stimulate economic growth, the proposals seek to boost the EU securitisation market by addressing aspects of the existing rules which unduly create barriers to issuance and investment. The package of proposals includes draft amendments to the EU Securitisation Regulation (SECR), the EU Capital Requirements Regulation (CRR) and the Liquidity Coverage Ratio (LCR) Delegated Regulation. Proposed amendments to the Solvency II capital requirements for insurers are expected to be published in the next few weeks. The proposals focus on simplifying reporting and due diligence requirements and introducing more risk sensitivity into the regulatory capital framework. Overall, the proposals are certainly moving in the right direction and are generally welcomed. However, some concerns remain. In this blog post, we summarise the key proposals and what they could mean for the industry.

AML

Navigating AML risks in M&A: Implications of the new EU AML Package

Anti-money laundering (AML) risk is no longer a peripheral concern in M&A – it’s a central deal issue. As enforcement ramps up across Europe, fuelled by a wave of new regulation and increasingly assertive supervisory practices, AML considerations are becoming more complex and consequential, demanding sharper focus from both buyers and sellers. With multi-million-euro fines becoming commonplace – even for relatively minor breaches – AML risks can derail deals, damage reputations, and undermine business models. Recent legislative developments, such as the entry into force of the EU AML Regulation and the publication of the EBA’s draft RTS on pecuniary sanctions, administrative measures and periodic penalty payments further underscore that AML has become a key priority for financial regulators in Europe. It’s therefore no surprise that AML risks play an increasingly important role in M&A transactions in the financial sector and beyond. Today, virtually every transaction has to deal with AML risks which may, if not adequately managed, become real deal breakers. Our blog post explores how those risks are evolving under the EU’s new AML package and what dealmakers can do to manage them.

Dates for your diary

The UK Government’s strategy for financial services: a catalyst for growth?
  
On 15 July, the UK Government is due to publish its growth strategy for the financial services sector alongside the Chancellor’s Mansion House speech. Since it came into power a year ago, the Labour Government has been calling for the financial sector to do more to grow the UK economy. It has already taken steps to make this happen, for example by legislating to create new pension megafunds, doing away with the PSR, and telling the FCA and PRA to regulate for growth rather than risk. In a recent report on the regulators’ secondary international competitiveness and growth objective, however, the House of Lords Financial Services Regulation Committee argued that much more needs to be done. Freshfields will be hosting a live one-hour webinar at 2pm London time on Wednesday, 23 July 2025, in which a panel of senior lawyers with expertise in financial services regulation, pensions, and competition law will analyse the Government’s growth strategy, its plans to overhaul the pensions industry, and what this means for financial institutions, consumers, employees and the economy. To register, click here.