UK Regulatory Radar

Appointed Representative Regime: HMT has proposed targeted reforms to the legislative framework for Appointed Representatives (ARs) to help prevent misconduct involving ARs, provide appropriate consumer protection when things go wrong, and better align accountability frameworks between ARs and their principal firms. Reforms proposed include the implementation of a regulatory gateway for principal firms, inclusion of ARs in the scope of the Senior Managers and Certification Regime (SM&CR), and the extension of the FOS’ compulsory jurisdiction to include ARs.

2026-27 Resolvability Assessments: The Resolution Directorate of the Bank of England (BoE) has written to bank CFOs setting out plans for the third Resolvability Assessment Framework (RAF) assessment, covering 2026–27. The letter notes that strong resolution arrangements reduce the likelihood and impact of future financial crises. Alongside assessment of firms’ overall ability to achieve the three resolvability outcomes, the exercise will include targeted testing of the Continuity and Restructuring outcome. Banks’ Resolution Assessments are due by 2 October 2026, and the BoE is expected to publish firm-specific and thematic findings in June 2027. The next RAF cycle is not expected before 2029-30. In the letter the BoE also announces that in the second half of 2026 it intends to carry out a review of the calibration of the scalar applying to internal MREL for ring-fenced banks or other entities at the top level of a material sub-group with a ring-fenced bank.

Berne Financial Services Agreement (BSFA) Section IV notifications: The PRA has published operational direction and guidelines for UK insurers regarding Section IV notifications under the BFSA. Effective from 1 January 2026, the BFSA is a mutual recognition agreement between the UK and Switzerland designed to enhance cross-border market access for financial services. This guidance outlines the process for UK insurers to provide covered services to Swiss clients without requiring a local presence or authorisation, by submitting notifications via the FCA Connect system.

See Retail Conduct for updates on the FCA’s pure protection and premium finance market studies and mutual life insurer customer outcomes review.

Defence-focused funds: The FCA has updated its fund authorisation webpage with a note clarifying its approach to defence-focused funds. Authorisation applications for investment funds that focus on the defence sector may benefit from prioritisation by the FCA, given the FCA’s stance that defence and resilience are core to market integrity.

Premium finance market study: The FCA’s premium finance market study shows the cost of premium finance has fallen by an average of 4.1%. Since the interim report in July 2025, over half the firms reviewed had improved customer outcomes through lowering their prices or fees. The FCA estimates that these changes will result in an overall saving of £157m a year for premium finance customers resulting from regulatory attention, fair value assessments and base rate reductions. No wider interventions in the market such as a price cap or mandated 0% interest rates are planned as this could restrict access to important cover for customers who can only afford to pay monthly. Instead, the regulator will maintain its focus through the Consumer Duty.

Pure protection market study: The interim findings from the FCA’s market study into pure protection products, highlight a market that is broadly working well, with high claims acceptance rates and claims ratios and low complaints rates, and no evidence of poor pricing outcomes from loaded premiums. However, there is a significant protection gap, with 58% of adults not holding a pure protection product. As part of the final stage of the study the FCA will conduct further analysis on the variation of claims ratios between products, switching to generate commission and ways to encourage more intermediaries to embrace positive practices. No significant market wide interventions are currently proposed, but the FCA proposes remedies to address access and the protection gap such as the increased use of prompts or trigger points (nudges) and the use of targeted support for pure protection products.

Smaller mutual insurers consumer duty review: The FCA has published the findings of its multi firm review into how smaller mutual life insurers meet Consumer Duty requirements. It found that mutuals generally focus well on customers, use strong metrics to measure value, and understand customer outcomes. However, the FCA notes that target markets are often too broad, value assessments lack depth, and, in general, firms do not have a clear rationale of how their practices are fair to with-profits policy holders. The FCA also noted inconsistencies in assessing future viability and understanding ‘gone away’ customers, which could impact reserving for future liabilities. The report highlights examples of both good and poor practices based on FCA expectations.

Motor finance commission claims – multiple representatives: The FCA and Solicitors Regulatory Authority (SRA) have issued a joint warning to claims management companies (CMCs) and Professional Representatives (PRs) involved in motor finance commission claims, highlighting risks of poor consumer outcomes. The regulators are concerned that some consumers are being represented by multiple firms for the same claim and are facing excessive termination fees. CMCs and PRs are expected to strengthen checks to prevent duplicate representation and ensure termination fees are fair, proportionate to work completed and clearly explained upfront. FCA-regulated CMCs are reminded of their Consumer Duty obligations, while SRA-regulated PRs must act in clients’ best interests and comply with agreed billing terms. The FCA has also written to lenders to address their role in resolving these issues, highlighting its expectation that they identify cases where there is more than one representative for the same complaint and it is unclear who is acting for the customer. In such circumstances, the FCA suggests that lenders contact all PRs to confirm the sole representative for the customer and then close any duplicative complaints.

Final rules on Deferred Payment Credit: The FCA has confirmed the final rules for the regulation of Deferred Payment Credit (DPC) commonly known as ‘buy now pay later.’ The rules confirm that the Consumer Duty, most existing rules for regulated credit activity (CONC) and other key areas of the FCA Handbook including the SM&CR and dispute resolution rules will apply to DPC lenders. DPC activities will be included in the FOS's compulsory jurisdiction. New rules will require lenders to provide information to DPC borrowers who have missed a repayment, and to give notice to the customer before taking certain action. Following consultation, the FCA has made minor changes, including a requirement for DPC lenders to provide information about free debt advice in certain circumstances. It has also clarified the information firms should provide to consumers who have missed payments. The rules come into effect on 15 July 2026.

Further rules for cryptoasset firms: The FCA has confirmed that the application period for firms wanting to undertake the new cryptoasset regulated activities will be 30 September 2026 to 28 February 2027. And in a further consultation paper, CP 26/4 the FCA is seeking feedback on proposed rules on:

• Consumer Duty: How the Consumer Duty will apply to cryptoasset firms, supported by non-Handbook guidance, to ensure good outcomes for retail customers.
• Redress and Dispute Resolution (DISP): The approach to complaints handling and redress to provide clear routes for consumers to resolve issues.
• Conduct of Business Standards (COBS): Application of key conduct rules to cryptoasset activities to ensure firms act fairly and transparently.
• Credit for crypto purchases: Rules on using credit to buy cryptoassets to mitigate risks associated with borrowing to invest.
• Training and competence: Standards for staff knowledge and skills to ensure competent management of crypto services.
• Senior Managers and Certification Regime (SM&CR): The proposed categorization of cryptoasset firms under the SM&CR.
• Regulatory reporting (SUP 16): Requirements for firms to report data for effective risk monitoring and supervision.
• Cryptoasset safeguarding: Application of safeguarding rules to firms conducting multiple regulated cryptoasset activities and the approach to custody of specified investment cryptoassets (tokenised financial instruments).
• Retail collateral treatment in cryptoasset borrowing: How retail consumers' collateral should be treated when borrowing cryptoassets to protect their interests.
• Location policy guidance: Clarifying expectations on where cryptoasset firms should be based to ensure effective oversight.

The new cryptoasset regime is expected to come into force on 25 October 2027.

For more on proposed market abuse rules for cryptoasset trading, see the article above

Report on the use of AI in financial services: The Parliamentary Treasury Select Committee’s report has found that more than 75% of UK financial services firms are now using AI, with the largest take-up among insurers and international banks. The Committee's view is that, by adopting a wait-and-see approach, HMT and financial services regulators are not doing enough to manage the risks presented by the increased use of AI in the financial services sector. The committee has recommended that:

• The Bank of England and the FCA to conduct AI-specific stress-testing to boost businesses’ readiness for any future AI-driven market shock.
• The FCA should publish practical guidance on AI for firms by the end of 2026. This should include how consumer protection rules apply to their use of AI as well as setting out a clearer explanation of who in those organisations should be accountable for harm caused through AI.
• The government should designate AI and cloud providers deemed critical to the financial services sector to improve oversight and resilience through the Critical Third Parties Regime.

Long-term impact of AI on retail financial services: The FCA’s Mills Review asks for views on how AI may reshape retail financial services for consumers, firms, markets and regulators by 2030 and beyond, across 4 interrelated themes. 

• How AI could evolve in the future, including the development of more autonomous and agentic systems.
• How these developments could affect markets and firms, including changes to competition and market structure and UK competitiveness.
• The impact on consumers, including how consumers will be influenced by AI but also influence financial markets through new expectations.
• How financial regulators may need to evolve to continue ensuring that retail financial markets work well.

UK SRS-aligned reporting for listed companies: The FCA is consulting (CP26/5) until 20 March on proposals to align sustainability reporting requirements for listed companies to the new UK Sustainability Reporting Standards (UK SRS) once these are finalised by the government. The FCA proposes mandatory reporting against UK SRS S2 (climate) with a ‘comply or explain’ approach for Scope 3 emissions, and a ‘comply or explain’ approach only for reporting against UK SRS S1 (wider sustainability). There are additional provisions for dual-listed companies. For more details, see the article above.

Open Banking pricing models: The FCA and PSR have issued a joint statement clarifying that they will not at this stage prioritise a Competition Act 1998 (CA98) investigation into the UK Payments Initiative's (UKPI) centralised "access fee" pricing model for commercial variable recurring payments (cVRP). After consulting the CMA and reviewing the scheme against the relevant principles and the Government’s National Payments Vision, the regulators conclude a competition investigation is currently unwarranted. This decision applies to ‘lower risk’ use cases, i.e. regulated financial services, regulated utilities, and local and central government for the period ahead of the legislative framework being brought in through the Data (Use and Access) Act 2025 (DUAA) or until July 2027.

Cross-border card fee cap: The High Court has upheld the PSR's powers to regulate payment systems, ruling that the regulator does have the statutory power to cap cross-border interchange fees. This decision follows a legal challenge against the PSR's proposal to address these fees, which argued that the PSR's statutory powers did not extend to regulating pricing. The ruling enables the PSR to continue its work in determining an appropriate level for the fees and advance towards implementation.