The last five years have seen a substantial increase in the number and variety of regulated firms operating in the United Kingdom, with the development in particular of financial services provided by new technology firms, asset managers, challenger banks, payment providers and e-money issuers. At the same time, an increasing number of UK Financial Conduct Authority ("FCA") regulated firms have entered into insolvency proceedings. The FCA has stated that whilst the minimisation of regulated firm failure is a key priority for the FCA, it recognises that it cannot completely prevent firm failure, especially in light of COVID-19. Accordingly, in December 2020, the FCA published the Consultation Paper, in collaboration with the recognised professional bodies that licence and regulate edit 1 insolvency practitioners ("IPs"), which aims to minimise disorderly failures of FCA-regulated firms.

Against this backdrop, FCA-regulated firms, their boards of directors, IPs and key stakeholders, such as banks, lenders and custodians, need to be aware of regulated firms' obligations to the FCA in an insolvency scenario and consider how they deal with the regulator.