Investment Firms Newsletter – February 2026.

The FCA has set out its final rules in PS25/9 implementing the Public Offers and Admissions to Trading Regulations 2024 as well as the framework for the Public Offer Platform (“POP”) Regime. Final rules for the public offer platform were set out in PS25/10. The changes are intended to make it easier for companies to raise capital in the UK and reduce costs promoting wider participation in the capital markets for smaller investors. Specifically, the POP regime allows smaller and scaling companies to raise capital by offering securities outside a public market to a broad investor base, including retail consumers. Firms considering becoming POP operators, such as crowdfunding operators or corporate finance firms, have the opportunity to add the POP activity to their permissions via a variation of permission. 

The FCA has published guidance for consumers following the commencement of the Public Offers and Admissions to Trading regime on 19 January 2026, outlining what retail investors should consider before investing in high-risk securities such as mini-bonds and loan notes. The new regime establishes updated rules and standards governing when and how offers of securities to the public can be made in the UK, covering both transferable instruments like listed shares and non-transferable debt securities.  

In its consumer guidance the FCA emphasises that products such as mini-bonds and loan notes carry significant risk and may not be suitable for all investors. Prospective investors are advised to verify whether the firm offering an investment is authorised, to understand the protections available under UK regulation and to be aware that unauthorised firm offerings generally afford fewer rights, including limited access to the Financial Services Compensation Scheme or Financial Ombudsman Service if things go wrong. The FCA also highlights the importance of research and vigilance against scams and notes that despite new powers under the regime its ability to act against unauthorised firms will remain limited. 

The FCA has fined two former Finance Directors of Carillion plc (in liquidation) for breaches of the UK Market Abuse Regulation and the Listing Rules arising from failures in financial reporting and market disclosures. Richard Adam has been fined £232,800 and Zafar Khan £138,900, reflecting reductions after both individuals withdrew challenges to the FCA’s findings. The FCA concluded that, during periods of significant financial deterioration within Carillion’s UK construction business, they failed to ensure that the market was properly informed of the company’s true financial position. 

The investigation identified serious weaknesses in Carillion’s financial reporting systems and controls, particularly in relation to contract accounting and the escalation of material information to the Board and Audit Committee. As senior executives with primary responsibility for financial oversight, Mr Adam and Mr Khan were found to have acted recklessly and to have been knowingly concerned in the publication of misleading disclosures. The FCA emphasised that senior financial leaders are expected to ensure that market communications are accurate, complete and timely, and that failures to do so will result in personal accountability. 

The FCA has published a webpage setting out best practice for firms use of risk warnings when distributing investment products. Although the guidance is focused on distributions to retail investors it represents good practice for all firms. 

Companies House identity verification rollout continuing; 12‑month window for existing directors and people with significant control. 

From 18 November 2025, identity verification becomes a legal requirement. This date is not a deadline. It marks the start of a 12-month transition period, giving your company time to make sure all directors and people with significant control (“PSCs”) have verified their identity by their due dates. 

As part of developing the UK crypto regulatory regime and longside the UK publishing finalised regulations for the introduction of licensing and market abuse regimes, the FCA has published CP25/40 proposing rules and guidance for firms conducting regulated cryptoasset activities such as trading platforms, intermediaries, staking and decentralised finance. In addition, the FCA has published CP25/41 on admissions and disclosures and the market abuse regime for cryptoassets and CP25/42 on a prudential regime for cryptoasset firms. These proposals form part of the regulatory regime expected to come into force in 2027. Although not yet binding, firms involved in digital asset services should review the FCA’s expectations and consider early alignment.  

The FCA has opened applications to its AI Sandbox, inviting firms and other market participants to apply to test AI tools and solutions in a controlled regulatory environment. The Sandbox forms part of the FCA’s AI Lab within its Innovation Services and is intended to support the safe responsible and effective use of AI across UK financial services. 

The AI Sandbox enables participants to experiment with AI use cases using synthetic and real world data while engaging directly with the FCA. Applications are open to firms at different stages of development including early-stage innovators and established financial institutions. Insights generated through the Sandbox will contribute to shared learning across the sector and help inform the FCA’s approach to AI regulation while supporting innovation competition and consumer protection. 

The FCA updated their webpage on operational resilience providing a link to their 2025 CBEST thematic, a targeted assessment tool helping the regulator assess a firms’ and financial market infrastructures’ cyber resilience. The FCA encourages firm’s cyber security teams and senior managers to consider the observations in the annual CBEST thematic analysis. 

The FCA together with the Bank of England and the Prudential Regulation Authority (“PRA”) has signed a Memorandum of Understanding (“MoU”) with the European Supervisory Authorities to enhance cooperation on the oversight of critical third parties (“CTPs”) that provide key services to the UK and EU financial sectors. The MoU establishes a framework for coordination and information sharing on the supervision of CTPs under the UK regime and critical third-party providers (“CTPPs”) under the EU’s Digital Operational Resilience Act (“DORA”), including during significant incidents such as power outages or cyber-attacks. The agreement is intended to manage risks to financial stability and market confidence, reduce duplication of regulatory oversight and reinforce operational resilience across borders.  

The MoU also reflects the UK’s commitment to international cooperation, with the UK regime designed to be compatible with DORA and aligned with similar international standards. It builds on new UK rules introduced in 2024 requiring designated CTPs to undertake resilience testing, report incidents and provide assurance on operational resilience. The FCA and PRA will continue to work with HM Treasury and their EU counterparts during the designation process and ongoing oversight activities, while ensuring that financial firms remain responsible for managing their own third-party risks in line with established outsourcing obligations. 

The UK Accelerated Settlement Taskforce (“AST”) published its Q4 2025 Quarterly Review, reflecting on the year’s progress toward the transition of the UK securities settlement cycle from T+2 (trade date plus two days) to T+1 (trade date plus one day). The report highlights the collaborative efforts made across industry and public authorities, including the publication of a detailed Implementation Plan outlining critical technical and operational actions required ahead of the transition deadline of 11 October 2027, which has been broadly aligned with equivalent timetables in the EU and Switzerland. The review underscores the need for continued engagement as firms accelerate their preparations for the significant operational changes required by T+1 settlement.  

In a foreword included in the review, senior representatives from the sector emphasise that while strong progress has been made, there remains substantial work to complete in 2026 to meet key milestones and deadlines. Industry readiness surveys cited in the report indicate growing engagement, with many firms now in project planning phases, but also draw attention to areas requiring heightened focus such as automation, confirmation and allocation processes, and broader market coordination. The AST and its partners continue to support market participants through outreach and monitoring as the transition timetable progresses. 

The House of Lords Financial Services Regulation Committee published its Report, “Private Markets: Unknown Unknowns” setting out conclusions from a six month enquiry into private markets. The growth of collaterised loan obligations and significant risk transfers away from the banks was found to potentially pose a risk to the UK’s financial stability. The report highlighted that in its efforts to gather data from regulators and other interested parties the Committee was not able to obtain extensive or detailed data on the growth of the UK’s private markets raising concerns regarding a gap in the data held by policy makers and regulators.  

Regulation S-P, amendments concerning the strengthening of data protection related requirements for investment advisers that needed to be complied with by larger firms from 3 December 2025 will apply to small advisers from 3 June 2026. Among other things, the amendments require firms to adopt formal incident response plans and notify customers within 30 days of any unauthorised access to sensitive customer information. Firms should make preparations to comply by the implementation deadline if they have not already done so.  

The SEC has published two new frequently asked questions (“FAQs”) on the Marketing Rule. The first covers cases where fees charged to an advertisements’ intended audience are anticipated to be higher than the actual fees charged. Footnote 590 of the adopting release states that if the fee to be charged to the intended audience is anticipated to be higher than the actual fees charged, the adviser must use a model fee that reflects the anticipated fee to be charged.

The FAQ clarifies that advisers are not prohibited from presenting net performance calculated using actual fees in these circumstances subject to there being relevant disclosures to illustrate the effect of differences between actual fees and anticipated fees on performance. The second allows advisers to compensate promoters for endorsements or testimonials even where a self-regulatory organisation, such as FINRA, has issued an order with respect to that promoter’s disqualifying conduct within the prior ten years subject to specified conditions.