The Financial Conduct Authority (FCA) is expected to begin supervising the first businesses under its expanded anti-money laundering remit before the end of 2028, Treasury minister Lord Pitt-Watson has indicated, while expressing his expectation that costs would not be materially higher after the transfer.
The proposed transfer would put the FCA in charge of AML supervision across legal and accountancy businesses and providers of trust and company services. Their existing regulators currently perform that role. Onboarding would proceed in phases, with the broad aim of bringing all firms within scope under FCA supervision by mid-2030.
Pitt-Watson outlined the plans during the House of Lords report stage of the Financial Services and Markets Bill, which would enable the transfer. Liberal Democrat Treasury spokeswoman Baroness Kramer had tabled probing amendments drawing attention to the absence of an implementation timetable.
The cost debate centres on the distinction between the AML requirements themselves and the arrangements for supervising compliance. Crossbench peer Lord Vaux of Harrowden questioned the financial consequences of firms dealing with two regulators. He argued that costs could increase even if, as he noted the FCA maintained, the underlying rules stayed the same.
Vaux considered smaller firms particularly exposed to additional costs. He also criticised the bill’s impact assessment for relying on unchanged AML rules without adequately examining the consequences of moving from one supervisor to two.
Pitt-Watson expressed no awareness of a separate calculation addressing that issue. His expectation was that costs would not be materially greater after the move. He identified the current structure of 23 AML regulators as the reason for seeking a more coordinated and consistent approach.
The FCA would consult on its future fee model before assuming supervision. The government expects fees to be proportionate and aligned with the FCA’s wider charging framework, under which smaller firms generally face lower costs than larger firms. That establishes an intended approach to fees, rather than a quantified answer to the transition-cost concerns raised by peers.
Kramer’s objections extended to the resources needed for guidance and education. She questioned whether the FCA could fund and staff that work, and whether professional bodies were being expected to continue providing it without payment. She also criticised the regulator’s high-level road map for insufficient detail on implementation and timing.
Although Kramer acknowledged historical fragmentation, she considered the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) reasonably effective in addressing it. Shadow Treasury minister Lord Altrincham separately highlighted concerns about communication of the transition and the practical operation of the new arrangements.
Pitt-Watson described the intended regime as proportionate to risk and sensitive to differences between professional sectors. Implementation would depend on functioning systems, arrangements for sharing information, trained supervisors and clear information for affected firms. The phased timetable therefore remains tied to operational readiness, while the planned fee consultation will address the charging model that firms would face under FCA supervision.
