Welcome to the latest edition of the Financial Regulation Weekly Bulletin.
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GENERAL
FINANCIAL CONDUCT AUTHORITY
Operational resilience - FCA publishes review findings - 27 March 2026
The FCA has published a review of the operational resilience rules in SYSC 15A of the FCA Handbook. Firms were required to have completed mapping and testing under those rules with a view to remaining within impact tolerances for each important business service by 31 March 2025.
The review sets out the FCA’s observations and insights in this context, highlighting examples of good practice by firms, including the use of clear, strong methodologies when defining important business services and setting impact tolerances. The FCA also comments on areas requiring improvement; some firms, for example, have not established distinct impact tolerances for market integrity and consumer harm. The FCA also found limited evidence of firms testing their communications strategies or plans to mitigate the loss of usual communication channels. Although many firms demonstrated maturity in governance, the FCA notes that all firms should continue to focus on board engagement, robust frameworks and evidence-based self-assessment for sector-wide improvement.
FINANCIAL CONDUCT AUTHORITY AND INFORMATION COMMISSIONER’S OFFICE
Vulnerability-related data - joint statement published by FCA and ICO - 27 March 2026
The FCA and the Information Commissioner’s Office have published a joint statement on their expectations surrounding the use of vulnerability-related data. The statement is designed to help firms understand and apply the FCA’s expectations on delivering good outcomes for customers in vulnerable circumstances under the Consumer Duty, whilst complying with data protection law.
In short, firms are expected to follow the key principles of the UK GDPR. Among other things, the statement notes that firms are not expected to collect new data on protected characteristics solely for monitoring purposes and that all personal information processed for monitoring purposes must comply with data protection principles.
The FCA and the ICO will continue to work together and engage with industry, including through work planned for 2026 on how the Consumer Duty applies through the distribution chain.
FINANCIAL OMBUDSMAN SERVICE
Plans, budget and awards limits 2026/2027 - published by FOS - 31 March 2026
The Financial Ombudsman Service (FOS) has published its plans and budget for the 2026/27 financial year. The accompanying press release comments that the FOS is currently undergoing the biggest transformation to its operations since its inception, referring to the joint consultation from the FOS and the FCA on modernising the redress system, reported last month in this Bulletin. Separately, the FOS has noted the increase to its award limits for the coming financial year. The background to this can be found in the FCA’s policy statement PS19/8.
BANK OF ENGLAND
FPC record - published for April 2026 - 1 April 2026
The Bank of England’s Financial Policy Committee (FPC) has published a summary and record of its meeting held on 27 March 2026. Among other things, the FPC considered the financial stability implications of the conflict in the Middle East, noting the potential impact on pre-existing vulnerabilities in sovereign debt markets, risky asset prices and credit markets. Separately, the FPC has asked the Bank of England and the FCA to undertake further work on the risks of agentic AI (see further item below), focusing on use cases in payments and financial markets. The documents also confirm that the FPC will provide an update on progress and next steps in its assessment of the overall level of capital requirements in the UK banking system in the July 2026 Financial Stability Report.
DIGITAL REGULATION COOPERATION FORUM
The future of agentic AI - DRCF publishes paper - 31 March 2026
The Digital Regulation Cooperation Forum (DRCF) (comprising the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), the Information Commissioner’s Office (ICO), and Ofcom) has published a paper exploring agentic AI. Agentic AI systems operate autonomously to achieve an overall goal by using multiple AI agents to perform a sequence of incremental tasks. The paper considers the possible implications of the use of agentic AI across governance, data protection and cybersecurity, consumer rights, and market dynamics and competition.
The paper comments that existing frameworks and requirements relating to transparency, fairness, safety, consumer protection and competition will continue to apply as agentic AI develops. The paper notes that there are plans for further DRCF research into consumer attitudes towards AI (including agentic AI) and how regulatory tools can support trusted and safe adoption.
BANKING AND FINANCE
EUROPEAN CENTRAL BANK
Eurosystem payments strategy - published by ECB - 31 March 2026
The European Central Bank (ECB) has published its Eurosystem payments strategy, covering wholesale, business‑to‑business, retail and cross‑border payments. The strategy sets out four main strategic aims: maintaining the key role of central bank money in retail and wholesale markets to ensure the effectiveness of monetary policy, financial stability and the smooth functioning of payment systems; making Europe’s payment system more robust and autonomous; encouraging more integrated, innovative and competitive payments for people and businesses; and supporting the international role of the euro.
The ECB recommends seizing the innovative potential of tokenisation and calls for standardisation, automation and process integration in business‑to‑business payments. On retail payments, the strategy highlights the role of the digital euro and how it will provide access to central bank money in a digital form. It confirms that the development of pan-European private retail payment solutions remains complementary to the digital euro project.
EUROPEAN BANKING AUTHORITY
Material changes and extensions to IRB approach under CRR - EBA publishes draft RTS - 30 March 2026
The European Banking Authority (EBA) has published a final report (EBA/RTS/2026/05) containing draft Regulatory Technical Standards (RTS) amending Delegated Regulation (EU) 529/2014, which supplements the Capital Requirements Regulation (575/2013) (CRR) with regard to assessing the materiality of extensions and changes to the internal ratings based (IRB) approach. The proposed amendments are intended to align the RTS with the changes introduced by the CRR III Regulation, including the removal of references to the IRB approach for equity exposures and the advanced measurement approach.
The EBA has submitted the draft RTS to the European Commission for endorsement.
HM TREASURY
Mortgage charter 2026 - HM Treasury publishes policy paper - 26 March 2026
HM Treasury has published a policy paper setting out a mortgage charter that has been reaffirmed with mortgage lenders. The mortgage charter, which has been in place since 2023, sets standards that will be adopted by mortgage lenders when dealing with residential mortgage borrowers who have concerns about higher interest rates.
This follows a meeting on 26 March 2026 between the Chancellor and lenders representing 75% of the market (alongside UK Finance) to discuss the outlook for mortgage rates in light of the conflict in Iran and the practical support available to borrowers. HM Treasury has confirmed that lenders will contact 1.6 million customers whose fixed-rate deals end between now and the end of the year to set out customers’ options, as well as how to access support.
BANK OF ENGLAND
Enhancing the resilience of the gilt repo market - Bank of England publishes feedback statement - 1 April 2026
The Bank of England has published a feedback statement on responses to its September 2025 discussion paper ‘Enhancing the resilience of the gilt repo market’. The discussion paper was intended to start a conversation with industry on the effectiveness and impact of a range of potential reforms, including greater central clearing and minimum haircuts on non-centrally cleared transactions. Among other things, respondents commented that existing access barriers, operational constraints and cost considerations made central clearing unfeasible or uneconomical for most market participants. They would therefore welcome innovation in this space, such as the introduction of cross-product margining and new access models.
The Bank of England states that it will continue to work on the assessment and design of potential policies that enhance the resilience of liquidity supply in stress. This includes exploring changes in market structure that would enable the greater adoption of central clearing in the future. It will also explore measures to improve risk management practices and margining in the non-centrally cleared gilt repo market to enhance system-wide resilience.
A more comprehensive update, including potential policy proposals, is expected to be published in early 2027.
PRUDENTIAL REGULATION AUTHORITY AND FINANCIAL CONDUCT AUTHORITY
High loan-to-income lending - PRA and FCA consult - 1 April 2026
The PRA has published a joint PRA-FCA consultation paper on high loan-to-income (LTI) lending (PRA CP6/26 / FCA CP26/12). The FCA has also published a webpage on the consultation.
Currently, mortgage lenders must limit the number of new residential mortgage loans made with an LTI ratio equal to or greater than 15% of their total number of new mortgage loans. Under the consultation proposals, the current 15% high LTI flow limit for individual firms would be removed. This follows a recommendation that the Financial Policy Committee (FPC) issued in July 2025 that individual lenders should be allowed to increase their share of lending at high LTIs. As an interim measure, the PRA made available a modification by consent for relevant firms to disapply the 15% limit; similarly, the FCA informed firms that they could apply for individual guidance if they wanted to lend at high LTI ratios above 15%.
Under the proposals, firms may determine their individual high LTI lending strategies in line with their own risk appetite and business models. However, firms that lend at levels above 15% must ensure they can manage the reduction of their LTI flow towards 15%, particularly if the regulators consider that firms should reduce their LTI flow. The PRA will publish the aggregate high LTI flow on its website on a quarterly basis. Relevant changes to the PRA Rulebook can be found in the appendices to CP6/26, together with draft versions of a PRA supervisory statement and FCA finalised guidance.
The deadline for responses is 1 July 2026. The implementation date for these reforms is expected to be in H2 2026. The interim PRA and FCA measures will remain in force until that date, with a backstop date of 31 December 2026.
FINANCIAL CONDUCT AUTHORITY
Motor Finance Consumer Redress Scheme - FCA publishes policy statement and final rules - 30 March 2026
The FCA has published a policy statement (PS26/3) on its compensation scheme for motor finance complaints. This follows a consultation on a proposed £11bn consumer redress scheme in CP25/27 which received over 1,000 responses.
The policy statement contains final rules for what is now a £9.1bn redress scheme (or, more accurately, schemes). As trailed in the FCA’s previous announcements, the final rules have streamlined some aspects of the schemes operationally while introducing a variety of additional exceptions. In line with expectations, a voluntary implementation period has been introduced of five months for pre-April 2014 agreements and three months for agreements beginning on 1 April 2014 or later.
For further details, please see our client briefing, available on the Slaughter and May website.
Poor practice in motor finance claims - FCA launches joint taskforce - 30 March 2026
The FCA has announced the launch of a new joint taskforce to tackle the poor handling of motor finance claims by claims management companies and law firms. The taskforce comprises the FCA, the Solicitors Regulation Authority, the Information Commissioner’s Office and the Advertising Standards Authority. It will consider issues related to unsolicited and misleading advertising, meritless claims, multiple representation and unfair exit fees.
DEPARTMENT FOR BUSINESS AND TRADE
UK Smart Data strategy - published by DBT - 26 March 2026
The Department for Business and Trade (DBT) has published an industrial strategy with a target of setting up active smart data schemes by 2030 (in accordance with Part 1 of the Data (Use and Access) Act 2025, which came into force on 20 August 2025). Smart data refers to the secure, consented, sharing of customer or business data with authorised third parties.
The DBT’s paper refers, among other things, to the government’s intention to prioritise key sectors such as banking and finance and to establish a long-term regulatory framework for Open Banking under the Data (Use and Access) Act 2025.
INSURANCE
INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS
Holistic framework - IAIS publishes report on implementation - 31 March 2026
The International Association of Insurance Supervisors (IAIS) has published a report on the second targeted jurisdictional assessment (TJA) of the implementation of the holistic framework. It evaluated Australia, Bermuda, Italy, Singapore, South Africa and Spain, acting as group-wide supervisors for internationally active insurance groups (IAIGs). Although these jurisdictions were found to have robust processes for identifying IAIGs, several gaps have been identified. For example, in certain jurisdictions, there is no legal authority to mandate recovery plans, and in some cases, the frameworks themselves are still in the process of being finalised.
The IAIS has also published a progress monitoring report on actions taken by assessed jurisdictions, including the UK, following the 2022 TJA.
EUROPEAN INSURANCE AND OCCUPATIONAL PENSIONS AUTHORITY
Supervisory reporting and disclosure requirements under Solvency II - EIOPA publishes revised ITS and guidelines - 30 March 2026
The European Insurance and Occupational Pensions Authority (EIOPA) has published a final report on revisions to implementing technical standards (ITS) on supervisory reporting and public disclosure, and to guidelines on reporting for financial stability purposes on the supervision of branches of third-country insurance undertakings under the Solvency II Directive (2009/138/EC). In short, the amendments are intended to simplify and reduce the reporting burden for firms subject to Solvency II, reflecting the European Commission’s objective to reduce reporting for all EU companies, as announced in its work programme in February 2025.
IDD - EIOPA publishes third report on application - 30 March 2026
The European Insurance and Occupational Pensions Authority (EIOPA) has published its third report on the application of the Insurance Distribution Directive (EU/2016/97) (IDD). The report provides an overview of the impact of IDD on consumers, insurance distributors and supervisory activities over 2024 and 2025, following input from national regulators and external stakeholders.
FINANCIAL REGULATORS COMPLAINTS COMMISSIONER
British Steel Pension Scheme - FRCC publishes FAQs - 26 March 2026
The Office of the Financial Regulators Complaints Commissioner (FRCC) has published Frequently Asked Questions (FAQs) on the final report (published on 26 March 2026) on the allegations made by former members of the British Steel Pension Scheme (BSPS) against the FCA. It has also published a summary of the final report.
The FAQs state that, as the FCA rejected the findings of the final report, it follows that the FCA will not offer any compensation under the Complaints Scheme and that complainants should not expect any compensation from the FCA. The FRCC summarises the options available to complainants that are unhappy with this outcome, which include applying for judicial review.
ENFORCEMENT
FINANCIAL CONDUCT AUTHORITY
Market abuse surveillance failures - FCA fines bank - 27 March 2026
The FCA has published a final notice (dated 24 March 2026) issued to Dinosaur Merchant Bank Limited (the firm) fining it £338,000 for failing to put in place effective systems and controls to detect and report suspicious trading in its contracts for difference (CFD) business. The press release comments that this case took nine months from opening to achieving a public outcome, demonstrating the FCA’s work to improve the pace of its enforcement investigations.
In June 2024, the firm introduced a new order system that led to a sharp increase in CFD trading by its clients. Between June and October 2024, trades with a corresponding asset value of approximately $3.05 billion were executed via the platform. These orders and trades were not captured and reviewed by the automated surveillance system which meant that potential market abuse could have gone undetected. Although the firm identified this issue in October 2024, it failed to properly address the deficiencies until May 2025. The delay limited its ability to identify and report potentially suspicious trading. The firm stopped selling CFDs in May 2025.
RECENT CASES
Kession Capital Ltd (in Liquidation) (Appellant) v KVB Consultants Ltd and others (Respondents) [2026] UKSC 11, 1 April 2026
Supreme Court - appointed representative - retail clients - Section 39 FSMA
The Supreme Court has unanimously allowed the appeal in Kession Capital Ltd (in Liquidation) (Appellant) v KVB Consultants Ltd and others (Respondents), ruling that Kession was not liable under section 39 of the Financial Services and Markets Act (FSMA) for advice that had been given by its appointed representative (AR) to retail clients in circumstances where Kession itself did not have permission to advise retail clients and had expressly prohibited its AR from giving advice to retail clients.
Lord Richards found that the “extent of the AR’s exemption under section 39(1), and the authorised person’s responsibility under section 39(3), are coterminous”. Under section 39(1) there must be a contract whereby the authorised person requires or permits the AR to carry on business of a prescribed description. The authorised person must accept responsibility in writing for the appointed person’s activities in carrying on the whole or part of that business. If those first two steps are satisfied, the appointed person will be exempt from the general prohibition in FSMA as regards the business or that part of it for which the authorised person has accepted responsibility.
This material is provided for general information only. It does not constitute legal or other professional advice.