FCA publishes first annual Perimeter Report

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The Report can be accessed here.

The Perimeter is a “patch-work” of UK & EU legislation, establishing numerous regulatory regimes. It determines which firms require authorisation, rules applicable to firms and level of protection parties are entitled to in the financial services space.

The Perimeter is complex and can cause difficulties for consumers and businesses falling within (sitting on the edge, or outside of) it! The Report highlights this and considers topics requiring further guidance and commentary.

Key areas of interest include:

Tech in the FS space

The Report acknowledges a distinction between financial services firms utilising technology to delivery products more efficiently, and technology companies entering the market to push financial services. This raises the question – are financial regulators armed with necessary tools and techniques to oversee these technology companies?
The FCA is clearly engaged in this space, initiatives like the FCA Sandbox and Innovate team show this. The Report refers to a forthcoming FCA “Open Finance” publication, focusing on Open Banking principles and data sharing in the sector too.

Digital Financial Promotions

The Report notes (rightfully so, we contend) that the FCA is reviewing the Financial Promotions Regime, to ensure its fit for purpose in a digital age. Engagement with Internet Service Providers and development of automated tools for detecting online marketing developments can help in this space.


The Cryptoasset sector is certainly on the FCA’s radar, it intends to publish finalised Perimeter guidance in Summer 2019. We see this as a useful tool to help develop the UK Cryptoasset sector. Although the UK sector is (presently) relatively small compared to other jurisdictions, recent developments show potential global reach of Cryptoassets solutions in the Financial Services space – the Facebook / Libra whitepaper and Moneygram’s strategic partnership with US-tech company Ripple.

Cross-Border “Challenges”

The Report flags the risk of “regulatory arbitrage” in the global financial marketplace, where firms conduct activity online, operating from a base in a less stringent regulatory regime to the UK or, for example, where firms operate from the UK but services are automated or driven by digital platforms and effect parties in overseas jurisdictions.

The FCA proposes no specific perimeter change at present, which we agree with, instead it will continue to remain involved with initiatives to better align international approaches to regulatory issues. The launch of GFIN (the Global Financial Innovation Network) in Q1 2019, is a great example. GFIN is built on the FCA’s 2018 proposal to create a global regulatory sandbox.

Navigating the Perimeter

If your business requires advice on the FCA regulatory perimeter or you’d like to know more about Capital Law’s Financial Services Regulatory expertise, please get in touch with Rachel Hillier.