UK Regulatory Radar

King’s Speech/Financial Services and Markets Bill: The King’s Speech 2026 announced the Enhancing Financial Services Bill (Financial Services and Markets Bill 2026–27), confirming the UK Government’s intention to legislate many of the initiatives set out in the Leeds reforms, including changes to the SM&CR, the FOS, bank ring-fencing and the consolidation of the PSR into the FCA. The Bill, introduced in Parliament on 18 May, also covers reforms to the CCA, the Appointed Representatives (AR) regime and insurance risk transformation.

Regulatory Initiatives Grid: The 10th edition of the Regulatory Initiatives Grid sets out the regulatory pipeline for financial services over the next two years across nine organisations. This edition includes 135 live initiatives and, as promised in the Payments Forward Plan, an enhanced focus on payments.

Regulatory environment reforms: HM Treasury (HMT) has outlined its final policy position and plans to bring forward primary legislation to deliver reforms which aim to ensure the financial services regulatory environment is effective, proportionate and aligned with the government's regulatory ambitions. The reforms are categorised under 4 “KPIs”: shorter statutory deadlines for applications, publication of long-term strategies every 5 years by the FCA and PRA, the FCA and PRA “having regard” for statutory supervisory principals, and reduction in prescriptive reporting and other procedural requirements on the regulator.

Shorter statutory deadlines for applications in particular are expected to have a positive impact on firms as application deadlines for variation of permissions, new firm authorisations, SMCR approved persons and variations, insurance distribution activities and financial promotions have been reduced significantly. The combined package of reforms is expected to enhance the regulatory environment by requiring the FCA and PRA to act more strategically and reduce unnecessary burdens on firms.

Bank of England (BoE) 2025 firm feedback survey: The BoE has published the results of its 2025 survey which was sent to 814 PRA-regulated firms or groups of firms, nearly twice the number in 2024. The survey results are used to identify areas where supervision could be improved and good practices that should be maintained or applied more widely. 439 firms responded, up from 303 in 2024. The most positive scores related to the articulation of regulatory objectives and expectations and relationships with the PRA, including the approachability, responsiveness and professionalism of supervisory teams. The PRA’s regulatory framework, rules and policy received lower scores than the other themes surveyed. Higher-impact firms felt that the PRA had a better understanding of their business models and was better at articulating the risks they faced. Lower-impact firms had a positive view of the handling of data requests.

The BoE notes that firms are seeking transparency through unambiguous feedback, clarity around the rationale for supervisory work and data requests, more forward visibility of supervisory workplans and prompter feedback. They would also welcome better co-ordination – between supervisory teams and specialists and between the PRA and the FCA and international regulators – and proportionate approaches including greater supervisory focus on the main risks faced by firms.

Ring-fencing reforms: HMT has announced a package of reforms to the UK bank ring-fencing regime. The government’s review of post-financial crisis banking separation rules concluded that ring-fencing continues to play an important role in protecting retail deposits and supporting financial stability, but that there is scope to make the regime more flexible, proportionate and growth-focused due to advances in bank resolution and other prudential regulation. Key reforms include proposals to permit additional activities within ring-fenced entities and allow greater sharing of operational and back-office services between ring-fenced and non-ring-fenced entities to reduce duplication and compliance costs for large banking groups. The government estimates that the changes could support up to £80 billion of additional business lending while retaining core depositor protections. It will amend primary legislation through the upcoming Financial Services and Markets Bill and also consult on the operation of the New Growth Allowance and other reforms to allow ring-fenced banks to provide more products and services to businesses. The PRA will consult this summer on the sharing of operational resources across the ring fence.

Prudential treatment of cryptoassets and expectations on innovations in the use of deposits, e-money and stablecoins: As part of a wider package of papers on tokenisation, the PRA has sent two ‘Dear CEO letters’ – see ‘Technology and Digital Innovation’ section.

UK bank capital requirements: The BoE has published a summary of an event held to gather evidence from stakeholders as part of the Financial Policy Committee's (FPC's) ongoing assessment of UK bank capital requirements. Discussions focused on the overall calibration of capital requirements, the usability of regulatory buffers, the functioning of the leverage ratio framework and the proportionality of capital requirements related to domestic exposures. The event followed the FPC's December 2025 decision to reduce its Tier 1 system-wide benchmark to 13%.

Low impact amendments: The PRA has finalised a number of Low Impact Amendments (LIAF01/26), which updates its Rulebook and policy materials without further consultation. These aim to enhance clarity, remove outdated references and refine existing requirements across areas such as regulatory fees, skills and expertise, the Small Domestic Deposit Takers (SDDT) regime and model risk management.

The PRA also consulted (LIAC01/26) until 21 May on further low impact amendments to:

• The Groups Part of the PRA Rulebook – proposed implementation date July 2026.
• A collection of PRA rules relating to the Capital Requirements Regulations 2013 – proposed implementation date 1 January 2027.
• The Countercyclical Capital Buffer Rates UK Technical Standard – proposed implementation date 1 January 2027.
• The frequency of the Other Systemically Important Institutions (O-SII) designation exercise in SoP1/16 – to be implemented 1 November 2026.
• The definition of firms in scope of the O-SII buffer in SoP1/16 and SoP4/16 – proposed implementation date July 2026.

Access to banking: HMT has commissioned an independent Review on Access to Banking Services. The review will assess how changes to in-person banking services because of reductions in services provided, increasing digitalisation and branch network restructuring are affecting consumers. It will consider whether declining access to in-person banking services is negatively impacting consumers, and the scale of any detriment to any specific cohort or demographic. The review’s report and recommendations will be provided to the government by October.

Funded Reinsurance: The PRA is consulting on changes to the capital treatment of Funded Re. See the article above for more.

Risk transformation regulation reform: HMT has published its consultation response regarding planned reforms to the Risk Transformation Regulations, aiming to enhance the UK's risk transformation and captive insurance markets. These changes signal a move towards greater flexibility in funding requirements and authorisation processes for transformer vehicles. They will enable protected cell companies to manage multiple risks from various parties, and facilitate their establishment for insurance contracts within the captive insurance framework. The government intends to take forward these reforms through a combination of primary and secondary legislation.

Fund tokenisation: The FCA has published guidance on tokenising UK-authorised funds and rules and guidance to facilitate a new UK approach to dealing in fund units. Read more in the article above.

Credit rating agencies multi-firm review: In its multi-firm review focusing on UK-registered Credit Rating Agencies (CRAs), the FCA examined surveillance processes, credit rating methodologies, and internal controls. Examples of good practice flagged within the review include: structured frameworks for ongoing monitoring, robust annual review practices, comprehensive reporting by compliance to the Board and INEDs, strong capability and expertise within compliance, direct observation of rating committees, and remuneration structures supporting independence of control functions. The review also includes good practice on how CRAs are considering ESG factors in methodologies and surveillance. CRAs are expected use the findings as a guide for self-assessment and remediation.

FCA consults on changes to IPO research rules: The FCA is proposing significant changes to rules governing the publication of research during the Initial Public Offering (IPO) process. The proposals aim to remove the mandatory 7-day delay for connected research and the requirement for firms to provide independent analysts with the same information as their own. These rules were initially intended to foster unconnected research. However, market feedback suggests that these requirements have instead introduced undue complexity, increased risk, and added costs to the IPO process.

Reforming the UK Money Market Fund Regulations (MMFR): The government has announced plans for legislation to establish a new UK regulatory framework for UK MMFs. This will be tabled as soon as parliamentary time allows. Under the framework, most requirements for UK MMFs will be set out in FCA rules and guidance. The announcement indicates that these funds will need to hold higher levels of liquidity. The new framework is expected to be in place by the end of 2026, and the FCA will issue a statement shortly with further detail on its plans. These will follow on from the FCA’s December 2023 consultation (CP23/28) on reforming the UK MMF regime.

Central counterparty (CCP) resolution execution and resolvability outcomes: The BoE, as resolution authority, is developing resolution strategies for CCPs. A discussion paper outlines three topics the BoE would like feedback on, all relating to how it would use its resolution power to resolve a CCP. Two cases relate to where a CCP fails to a non-default loss event and one case where one or more clearing members default. 

Consumer Duty board reports: The FCA has published its assessment of Year 2 Consumer Duty Board reports. The assessment highlights where firms have strengthened their approach and where further development is required based on supervisory reviews of reports provided to the FCA. While acknowledging significant improvements, the FCA emphasised the need for continued progress as firms prepare for their third reporting cycle. Areas for improvement include improvements in the assessment of consumer understanding and support, greater clarity on how data evidences outcomes, a lack of evidence of meaningful board challenge and improvements around distribution chain oversight.

Claims management company (CMC) practices: The FCA, working with the Solicitors Regulation Authority (SRA), has launched a review into claims management market practices to address concerns about potential consumer harm. The review will consider whether consumers are receiving fair value, the impact of financial incentives, marketing and advertising practices, the consumer journey and regulatory alignment across the market. It has been prompted by poor practices seen mainly in motor finance claims and in housing disrepair cases. The FCA has warned that the review may result in a call for legislative change to address any concerns such as whether CMCs and law firms should be subject to stronger compensation mechanisms where harm is caused.

Financial promotions: The FCA is reviewing the consumer credit financial promotions rules. Consultation (CP) 26/15 proposes to remove duplicative or outdated requirements and explores opportunities to improve costs disclosure to support greater consumer understanding, including the effectiveness of annual percentage rates (APRs). The consultation proposes to remove CONC 3 requirements that either overlap with the Consumer Duty or are considered overly prescriptive. This includes several provisions related to clear, fair and not misleading rules (CONC 3.3), as well as lender rules regarding financial promotions and communications (CONC 3.8). The FCA is also seeking feedback on potential modifications to the communication of APRs within credit advertising, outlining four policy options; including a range of APRs, disclosing the maximum APR rate that could be offered, increases to the threshold percentage, and providing brief explanations for the basis of a particular rate.

Consumer investment firms’ support for bereaved customers: The FCA has announced plans to review the ways in which consumer investment firms such as advisers, platforms and wealth managers support bereaved customers. The FCA will examine firms’ communications, how they support vulnerable customers, their service standards and how fees are handled for bereaved accounts. From this month, the FCA will contact selected firms as part of the review.

Consumer Credit Act reform: HMT has published its policy statement on reforming the Consumer Credit Act 1974 (CCA) to support effective competition and innovation while maintaining appropriate consumer protection. The proposals set out a framework that places greater emphasis on FCA rules and guidance than on prescriptive legislative requirements. The measures are expected to be included in the Financial Services and Markets Bill announced in the King's Speech on 13 May. In response, the FCA has confirmed that it will consult on the key elements of the consumer credit framework. The FCA’s approach will be underpinned by the Consumer Duty and will consider existing consumer rights and protections, including cancellation and withdrawal, and termination of agreements, including early settlement.

Claims management services market study: The FCA has launched a review of the claims management market and is seeking views on the scope of the review. The study will concentrate on claims management services provided in relation to financial services and financial products claims and housing disrepair claims. The study will focus on:

• Consumer journeys
• Pricing-related harms
• Business model incentives
• Risks created by low financial resilience in claims firms
• Incentives created by the regulatory landscape.

Whilst the focus is on distinct claims management services, the FCA warns the outcomes may have wider relevance across other services, and it will act if broader issues emerge. The review will commence in June with initial findings shared this year followed by the final report in May 2027.

See Banking for an update on HMT’s Review on Access to Banking Services.

Cyber Coordination Group Insights: The FCA has published insights from its Cyber Coordination Group (CCG) programme, summarising discussions held throughout 2025 and compiling good and poor practices shared by industry members. The programme, which includes around 140 firms across various financial sectors, facilitates the exchange of insights on cyber resilience. The report focuses on cyber resilience across three key areas: incident response practices and recovery at scale, implications of AI and other emerging technologies for cybersecurity, and insider risk management. The insights are intended to help firms strengthen their cyber resilience capabilities by learning from others' experiences, without introducing new regulatory expectations.

Frontier AI and cyber resilience: The Bank of England, FCA and HMT have issued a joint statement highlighting the significant implications of frontier AI models for cyber security and operational resilience in financial services. They note that these advanced AI capabilities, if misused, amplify cyber threats and require regulated firms to reinforce their protective, detective, threat containment and cyber response measures. They encourage firms to plan proactively for and seek to mitigate these risks in line with existing operational resilience rules.

Frontier AI and cyber resilience: See Operational Resilience above.

Call for input on the future of tokenisation: The FCA and BoE have launched a call for input on their joint vision of the future of tokenisation in UK wholesale financial markets. This discussion aims to facilitate the safe and effective adoption of tokenised securities, harnessing their potential to enhance efficiency, resilience, and transparency across the financial system. Key areas of focus include developing a comprehensive regulatory regime for the issuance and settlement of digital securities, ensuring equivalent prudential treatment for tokenised and non-tokenised assets where risks are comparable, and enabling access to innovative central bank money settlement for digital asset ledgers. The paper also outlines support for HMT's Digital Gilt Instrument (DIGIT) pilot.

PRA position on innovations in the use of deposits, e-money and stablecoins: In a follow-up to its 2023 “Dear CEO Letter” on innovations in the use of deposits, e-money and regulated stablecoins, the PRA has reaffirmed its position and clarified expectations. Key expectations include ensuring distinct branding for e-money and stablecoin products compared to tokenised deposits, particularly when offered to retail customers, to mitigate contagion risks, and issuing e-money and stablecoins from separate, insolvency-remote entities. Firms must also clearly inform customers about the different protections for these products. The letter also outlined broader expectations for managing money laundering/terrorist financing risks, liquidity risks, operational resilience, and the responsibilities of senior managers, as well as continuing to keep supervisors informed of any material developments in firms’ plans for innovations in the use of digital money or money-like instruments.

Prudential treatment of banks’ cryptoassets exposures: The PRA’s letter to CEOs updates its expectations for managing the prudential risks from cryptoasset exposures. The PRA continues to expect that firms apply a 100% capital requirement to unbacked cryptoassets to reflect their elevated volatility and/or limited price history. However, since the PRA’s 2022 letter, some forms of cryptoassets have started to emerge (e.g. tokenised traditional assets) that exhibit features that pose less significant risks. It is now the PRA’s view that tokenised traditional assets would, in general, receive the same prudential treatment as their non-tokenised equivalents where the legal rights conferred are identical and the underlying risks are comparable. In determining the prudential treatment, the PRA therefore encourages firms to focus on the risk characteristics and holistic outcomes of tokenised traditional asset arrangements rather than the specific technology or type of ledger (e.g. permissioned vs permissionless) on which they are recorded. These expectations will continue to be on an interim basis until the PRA publishes its proposed future prudential framework. This will follow the completion of the BCBS targeted review.

Distributed ledger technology (DLT)  Innovation Challenge 2025: The BoE has summarised the findings of its DLT Innovation Challenge with the BIS Innovation Hub London Centre, financial services and technology firms, and academic experts. Participants explored the application of DLT in wholesale payments and settlement across four key themes: settlement finality, scalability, network and asset control, and interoperability with other DLT and non-DLT systems. The challenge found that implementing DLT for wholesale settlement presents notable design trade-offs as enhancements in areas like speed or scalability often introduce new dependencies or resilience concerns. In addition, approaches that enhance decentralisation may complicate governance or control, while interoperability solutions frequently shift, rather than remove, underlying trust assumptions. These insights are set to inform future analysis, experimentation, and policy development, helping to identify DLT’s potential benefits, existing limitations, and areas requiring further consideration as financial market innovation progresses.

Card scheme and processing fees: The PSR is consulting on proposed rules and guidelines for Regulatory Financial Reporting (RFR) as the final remedy being pursued following its market review of card scheme and processing fees. The rules/guidelines would require Mastercard and Visa to provide the PSR with specific financial statements and information each year. The RFR proposals aim to provide the PSR with consistent and reliable financial data to assess profitability and address potential issues arising from market power.

Settlement hours: The BoE is consulting on proposals to extend RTGS and CHAPS settlement hours towards near 24x7 operation. Following confirmation of early morning extension to 01:30 from September 2027, the BoE proposes a two-step approach for further extended settlement. The first step involves the introduction of weekend and bank holiday settlement (not before 2029) – and then extending weekday settlement hours and adding one day of weekend settlement, ultimately aiming for 22x6 operation. For the longer term the BoE is seeking views on two different long-term end-states – extension to 22x7 and extension to 23.5x7 operation.  

Pension schemes Act: On 29 April, the Pension Schemes Act became law, delivering major reform to the UK's pension system. The Act will require pension schemes to prove they are delivering value for money, enable the automatic consolidation of small pension pots, and create larger, better-performing funds. The Act also paves the way for the Pensions Commission to examine how to ensure future pensioners are on track for a comfortable retirement and make further recommendations. The detail will be set out in a series of consultations, meaning the effective dates for the measures could be months or possibly years away.

Pensions Commission interim report: The Pensions Commission has published its interim report on the state of retirement saving in the UK, setting out the key challenges facing the current system and where it will focus its work next. It highlights that many people are not saving enough for retirement, particularly among low and middle earners, the self‑employed and women, and points to the need for the system to evolve to meet modern working lives. A final report with recommendations will follow in early 2027.

TPR’s 2026 annual funding statement: TPR has published its Annual Funding Statement (AFS) for 2026, setting out expectations for trustees and sponsoring employers of defined benefit (DB) pension schemes. With most DB schemes now in surplus on a buyout, low dependency and technical provisions basis, TPR expects trustees to focus on long-term endgame planning rather than deficit recovery. However, schemes should remain alert to wider economic and geopolitical uncertainty and the risks these pose to investment strategies. The AFS also highlights an upcoming TPR statement on issues to consider around surplus release and highlights proposed changes to surplus release rules included in the Pensions Scheme Bill which received Royal Assent on 29 April.