As the financial services industry approaches 2025, several significant regulatory changes are set to reshape the global landscape. These developments aim to enhance transparency, protect consumers, and ensure the stability of financial markets. Below is an overview of the key regulations to watch for in 2025 across various regions.
1. United States: Enhanced Capital Requirements
In response to recent banking challenges, the Federal Reserve has proposed stricter capital requirements for major U.S. banks. Initially, these proposals suggested a 19% increase in capital reserves; however, after industry feedback, the proposed increase has been adjusted to approximately 9%. These changes are expected to be implemented in 2025, aiming to bolster the resilience of the banking sector.
2. United Kingdom: Financial Services and Markets Act 2023
The UK’s Financial Services and Markets Act 2023 introduces a comprehensive framework for financial regulation post-Brexit. Key provisions include the revocation of certain EU-derived regulations and the establishment of a tailored UK regulatory regime. Notably, specific sections of the Act are scheduled to come into force on March 31, 2025, impacting various financial instruments and market operations.
3. European Union: Digital Operational Resilience Act (DORA)
The EU’s Digital Operational Resilience Act (DORA) aims to strengthen the IT security of financial entities. Effective from January 2025, DORA mandates that financial institutions implement robust ICT risk management frameworks, conduct regular resilience testing, and manage third-party ICT risks effectively. This regulation seeks to ensure the stability and security of the EU’s financial system in the digital age.
4. Global: Cryptocurrency Regulations
With the growing adoption of cryptocurrencies, regulatory bodies worldwide are establishing frameworks to oversee digital assets. In May 2024, the U.S. Congress advanced the Financial Innovation and Technology for the 21st Century Act, aiming to provide regulatory clarity for digital assets. This legislation delineates responsibilities between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) concerning various blockchain technologies. The Act is expected to influence global regulatory approaches to cryptocurrencies in 2025.
5. United Kingdom: Buy Now, Pay Later (BNPL) Regulation
The UK government plans to implement significant regulatory changes to the Buy Now, Pay Later (BNPL) sector to better protect consumers. The new regulations, expected to take effect in early 2026, will place BNPL under the Financial Conduct Authority (FCA). These rules will require BNPL providers to act in consumers’ best interests, conduct stringent affordability checks, and grant shoppers protections equivalent to those in the Consumer Credit Act.
6. United Kingdom: Sustainability Disclosure Requirements (SDR)
The UK’s Financial Conduct Authority (FCA) has extended the deadline for firms to comply with ‘naming and marketing’ rules under Britain’s Sustainability Disclosure Requirements (SDR) to April 2025. These rules aim to combat ‘greenwashing’ by ensuring the accuracy of sustainability claims. Firms must still submit applications by October 1, 2024, but now have additional time to adjust their names and marketing strategies.
Conclusion
The regulatory landscape for financial services in 2025 is poised for significant transformation. Financial institutions must stay abreast of these developments to ensure compliance and maintain their competitive edge in a rapidly evolving environment.
References
- “How Wall Street won ‘capitulation’ from the Federal Reserve on new bank rules,” Financial Times, September 11, 2024. Financial Times
- “The Financial Services and Markets Act 2023 (Commencement No. 8) Regulations 2024,” UK Legislation, October 28, 2024. Legislation.gov.uk
- “DORA and its impact on UK financial entities and ICT service providers,” PwC UK. PwC
- “Cryptocurrency,” Wikipedia. Wikipedia
- “Major Buy Now, Pay Later update for millions as huge rule change to protect shoppers will happen within months,” The Scottish Sun, October 20, 2024. The Scottish Sun
- “UK watchdog gives funds anti-greenwashing rule extension,” Reuters, September 9, 2024. Reuters
