KPMG Regulatory Barometer: Pressures mount on UK financial services

The gap between UK and EU rules is widening at a pace.

The gap between UK and EU rules is widening at a pace.

  • The gap between UK and EU rules is widening at a pace
  • ESG and Sustainable Finance top regulatory impact over the last 6 months
  • Pressure on firms remains intense, with a score of 7.0, slightly up from 6.9 Oct’22

KPMG UK today launches the second edition of its Regulatory Barometer, providing a biannual measure of the regulatory pressure UK and EU financial services firms face. The Barometer Impact Score stands at 7 (out of 10), up marginally from 6.9 in October 2022, showing no let-up in the regulatory intensity facing UK and EU financial services firms.

For the second time, KPMG found that ESG and Sustainable Finance regulations are putting the most pressure on firms. The industry can expect this level of focus to continue through 2023 and beyond as disclosure requirements are implemented, supervisors increase their expectations around climate risk and initiatives around ESG data and ratings, product labels and carbon markets ramp up.

Rob Smith, Head of KPMG Risk and Regulatory Advisory said: “Regulators have faced a challenging six months. The need to respond to market volatility and the cost-of-living crisis could easily have distracted from progressing longer term priorities, however the drive towards a more responsible and sustainable sector continues with a relentless focus on ESG and Sustainable Finance. We expect the pressure on firms to persist as supervisors and customers increase their expectations.”

The Barometer also maps regulatory divergence between the UK and the EU where the greatest differences can be seen in Governance Expectations, Customer Protection and Access to Markets. The Edinburgh Reforms reopen 43 rulebooks creating significant potential for further divergence.

Kate Dawson, a Director in KPMG’s Regulatory Insight Centre added: “As the UK forges ahead with new approaches post-Brexit, and regulators consider their new competitiveness objectives, firms will likely need to adapt to an increasingly different set of requirements in the UK versus Europe. The volume of emerging requirements for ESG and Sustainable Finance may lead to further differences despite global standard-setters’ best efforts to be aligned.”



Notes to editor

The full KPMG Regulatory Barometer can be found at: Regulatory barometer - KPMG Global

Find the October ’22 UK Regulatory Barometer press release here: Financial institutions - KPMG United Kingdom


KPMG’s analysis results in a single metric - a regulatory Impact Score - aggregated from individual theme scores. Each score is based on the volume of regulatory updates, the complexity of the underlying rules and the challenges of implementation. In addition, maturity indicators demonstrate progress made in each area of regulation, from ‘emergent’ through ‘developing’ to ‘implementing’ and ‘mature/BAU’, alongside views on where key EU:UK regulation is likely to align or diverge. Supporting data is drawn from KPMG’s Regulatory Horizon technology which scans the regulatory landscape over the past six months. This data is overlaid with expert views from the KPMG Regulatory Insight Centre.


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KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.72 billion in the year ended 30 September 2022.  

KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 265,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.