Navigating New Pension Rules and FCA Updates

Unknown Speaker

Hi everyone, welcome back to the B-Compliant Podcast. I'm Vicky Pearce and as always, I'm joined by Rachel MacRae. Rachel—are you ready to get stuck into the latest regulatory whirlwinds?

Rachel MacRae

Absolutely, Vicky! I was just finishing some historic fiction last night, but nothing compares to some good pension regulation, does it?

Unknown Speaker

Oh, absolutely riveting stuff—especially with what's coming up! So today we're starting with a big one: new joint proposals from the FCA, DWP and The Pensions Regulator, all about pension transparency and, well, making sure people actually get value for money from their schemes.

Rachel MacRae

Right, and it's more than just a tidy-up. The rules would force schemes to publish much clearer—really, more comparable—data, not just performance but on fees, service quality, pretty much the whole lot. Which, let’s be honest, for a long time has felt like trying to compare apples and oranges with your eyes shut.

Unknown Speaker

Exactly! There are 16 million pension savers across the UK, and for those people, the difference between being in a poorly performing scheme versus a good one—it’s absolutely massive. The FCA’s even highlighted, over five years, a £10,000 pot could become £10,400 in a bad scheme, but £15,100 in a strong one. That’s a 46% difference—proper jaw-dropper, that.

Rachel MacRae

Yeah, and the real headline here is the colour-coded rating system they’re introducing. It's supposed to go from dark green—which is strong—then light green, amber if things need improving, and red if it's, well, not good at all. I do love a bit of colour-coding—makes it all so much less soul-destroying to read reports, doesn’t it?

Unknown Speaker

It does! And it’s not just about the ratings, is it? These proposals are actually raising the bar for governance. If a scheme’s coming up red, trustees and providers need to act—either improve things or get those savers moved somewhere better. We’ve seen a few consultations like this previously—remember our chat last year about outcome-driven pension reforms? This builds on that feedback.

Rachel MacRae

Exactly. And what stands out to me is they're not just looking backwards now—these metrics are designed to show what sort of returns and risks you might expect over the next decade, a bit more forward-looking. But just to recap, this framework is only at the consultation stage at the minute, open until March 2025, and it’s all hinged on the Pension Schemes Bill getting its Royal Assent.

Unknown Speaker

Spot on. And like we’ve said before on the podcast, it's about transparency so clients can make genuinely informed choices—not just being given a hundred-page document that confuses everyone except the actuaries. It’s a big shift for trustees, advisers, and, frankly, compliance managers as well.

Rachel MacRae

Definitely, Vicky. And for anyone listening, we’ll keep an eye out as this progresses. Right, should we move onto the next regulatory curveball?

Unknown Speaker

Let’s. Now, something for our market infrastructure folks—derivatives trading. The FCA’s once again extended its direction under the UK MiFIR Derivatives Trading Obligation. So, Rachel, do you want to have a go at explaining what’s going on?

Rachel MacRae

Yeah, I’ll give it a whirl! This is the third—or is it fourth?—time they’ve revisited this since Brexit. The FCA’s said their direction will stay in place for another six months, this time through to June 2026. Basically, it’s all tied up with these ongoing venue equivalence issues between the UK and the EU. Not the most exciting dinner party chat, but definitely important.

Unknown Speaker

Absolutely critical if you’re trading derivatives cross-border. The big headache here is that, because the UK and EU still don’t recognise each other's trading venues as equivalent, UK firms can find themselves in a right muddle—do they follow the UK DTO, the EU one, both, neither? It’s the stuff compliance nightmares are made of.

Rachel MacRae

Exactly, and this extension means UK firms trading with—or for—EU clients can still execute deals on EU venues, as long as certain conditions are met. The FCA’s been really clear: they want markets to remain orderly, so they’re using these temporary extensions to avoid total chaos.

Unknown Speaker

Yeah, and the statement’s pretty explicit that these measures are to prevent market disruption, as there’s no equivalence in sight yet. Firms just need to make sure their clients aren’t trading on venues the UK and EU both see as equivalent, which… I always found a bit fiddly in practice.

Rachel MacRae

It’s one of those grey areas, isn’t it? But as we discussed when we covered this on previous episodes, the direction is reviewed every six months, so firms can't get too comfy. The FCA has said they'll issue another statement when it comes up again. So no resting on your laurels, folks!

Unknown Speaker

No indeed! Just a reminder for compliance teams: even though this gives a bit of breathing room, you still have to do your due diligence, document decisions properly—you know the drill from the last few episodes. It all comes back to operational resilience, doesn’t it, Rachel?

Rachel MacRae

Oh absolutely. Nothing is ever simple in regulatory land. Speaking of which, shall we dig into some FCA enforcement drama?

Unknown Speaker

Let’s do it. The big story this week is the FCA’s action against Verus Financial Services. They’ve completely revoked all of Verus’s permissions and made asset restrictions even tighter. And the reasons are, well, a bit of a greatest hits of what not to do in compliance.

Rachel MacRae

Honestly! You’ve got repeated, and I think the key word is 'deliberate', breaches of an agreed asset restriction, failing to comply with a Financial Ombudsman Service award, and just not being open—or cooperative—with the regulator. I mean, when we talk about the importance of transparency and engagement, this is what happens if you don’t.

Unknown Speaker

Spot on. The FCA is really showing their teeth here—if a firm is evasive or even just slow to engage, those doors can slam shut very quickly. We keep returning to the theme—whether you’re responding to something routine or it’s a serious matter, openness is non-negotiable. There’s a broad takeaway here for all regulated firms.

Rachel MacRae

Completely agree. It’s a cautionary tale, especially when you see the FCA’s wide range of powers and just how little patience they have for, well, stonewalling. Reminds me of some points we raised in Episode 7 on fee changes and data quality—a culture of proper controls and timely responses is absolutely essential.

Unknown Speaker

Exactly, and while we’re on infrastructure, it’s also worth giving a quick mention to the FCA’s new cost-benefit analysis on the UK equity consolidated tape. It’s quite a technical note, but for firms worried about future market data costs and transparency, it’s definitely worth a look—lots of detail on pricing, adoption rates, and why they think take-up is bound to grow once people trust the system.

Rachel MacRae

Yeah, we could probably do a whole episode on that—maybe we will! But for now, that’s all we’ve got time for. Vicky, I’ll let you wrap us up.

Unknown Speaker

Thanks, Rachel. So, to sum up: big changes on the pension horizon, temporary certainty for derivatives traders, and another very clear signal from the FCA on the importance of openness and accountability. We’ll keep you up to date as things develop—as always. Thanks for tuning in, and we’ll catch you again on the next episode of B-Compliant. Have a great week, Rachel!

Rachel MacRae

Thanks Vicky! Bye everyone—don’t forget to subscribe, and we’ll be back doing compliance so you don’t have to!