Financial Regulation Weekly Bulletin - 1 October 2026

Banking and finance

Basel Committee on Banking Supervision

Basel Committee advances supervisory and regulatory initiatives and reviews banking system risks – BCBS publishes meeting press release – 1 October 2026

The Basel Committee on Banking Supervision (BCBS) has published a press release on its meeting in Indonesia on 28-29 September 2026. At the meeting, BCBS members discussed vulnerabilities of the global banking system and supervisory and regulatory initiatives. 

At the meeting, the BCBS:

•    discussed AI developments and their implications for banks and supervisors, and agreed to review the operational-risk framework’s loss event-type categories with a focus on cyber and AI risk;
•    approved a final standard for machine-readable Pillar 3 disclosures, to be published around year-end;
•    approved the annual assessment exercise for global systemically important banks (G-SIB) and revisions to the G-SIB framework to reduce year-end window-dressing, and agreed to consult on the treatment of intra-banking-union cross-border exposures;
•    agreed to consult on additional Pillar 2 guidance on interest rate risk in the banking book (IRRBB); and
•    advanced its targeted review of the prudential standard for banks’ cryptoasset exposures, with an update expected by year-end.

European Banking Authority

Joint decisions on institution-specific prudential requirements – EBA consults on revised ITS – 25 September 2026

The European Banking Authority (EBA) has published a consultation paper (EBA/CP/2026/19) on draft Implementing Technical Standards (ITS) on the conditions of application of the joint decision process for institution-specific prudential requirements under Article 113 of the Capital Requirements Directive (2013/36/EU) (CRD). The draft ITS would repeal and replace Commission Implementing Regulation (EU) No 710/2014, comprehensively revising the harmonised procedures, timelines and templates that supervisory colleges use to reach joint decisions on the capital and liquidity requirements of cross-border banking groups.

The revision aligns the joint decision framework with the current CRD mandate and the revised Supervisory Review and Evaluation Process (SREP) framework, and forms part of the EBA’s wider work to simplify the EU prudential and supervisory framework.

The EBA will hold a virtual public hearing on 10 November 2026, and the consultation closes on 4 January 2027. Following its assessment of the responses, the EBA will finalise the revised ITS and submit them to the European Commission, after which they will be subject to scrutiny by the European Parliament and the Council before publication in the Official Journal.

EBA publishes its 2027 Work Programme – 30 September 2026

The European Banking Authority (EBA) has published its Work Programme for 2027 (EBA/REP/2026/18), adopted by its Board of Supervisors on 29 September 2026. The programme is organised around three cross-cutting drivers: fostering resilience, improving efficiency and supporting transformation. It marks a first step towards a broader medium-term strategy to position the EBA as a next-generation regulator, a body developing supervision at new frontiers and a provider of services to the supervisory and resolution community.

The EBA’s areas of focus include finalising implementation of the 2024 banking package; implementing the new payment services framework; supporting crisis management and deposit insurance reforms; contributing to the Savings and Investments Union and securitisation agendas; implementing a new supervisory convergence framework; enhancing stress testing; and advancing integrated reporting and data sharing. It will also continue to embed its responsibilities under the Digital Operational Resilience Act (DORA) (as lead overseer of 19 critical ICT third-party providers), the Markets in Crypto-assets Regulation (MiCA) (as supervisor of significant crypto-asset token issuers) and the European Market Infrastructure Regulation (EMIR) (as validator of initial margin models). The programme is closely aligned with the European Commission’s banking competitiveness agenda and its focus on simplification and burden reduction.

Bank of England 

Financial Policy Committee Record and 2026 H2 Systemic Risk Survey – Bank of England publishes record and risk survey report – 30 September 2026

The Bank of England (BoE) has published the record of the Financial Policy Committee (FPC) meeting held on 25 September 2026, together with the results of its 2026 H2 Systemic Risk Survey.

The FPC judged that the likelihood of interconnected vulnerabilities crystallising had risen since July, driven by the re-escalation of the conflict in the Middle East, higher oil and gas prices and a more protracted negative supply shock, with sovereign bond yields reaching levels not seen since 2008. It highlighted rapidly growing AI-related debt issuance and recent frontier AI incidents as broadening cyber, operational and market risks, and continuing vulnerabilities in risky credit and parts of private credit, while judging UK households, corporates and the banking system to remain resilient. The Committee maintained the UK countercyclical capital buffer at its neutral 2% rate and agreed to proceed with the leverage ratio reforms set out in its July Record, on which the BoE expects to consult in early 2027.

In the 2026 H2 Systemic Risk Survey (conducted between 27 July and 24 August 2026, with 57 firms responding), 95% of respondents remained very or fairly confident in the stability of the UK financial system, although the perceived probability of a high-impact event rose over both the short and medium term. Geopolitical risk (cited by 91% of respondents) and cyberattack (75%) remained the most frequently cited sources of risk, while the proportion citing risks surrounding artificial intelligence rose sharply to 63% (up 32 percentage points).

Prudential Regulation Authority 

IFRS 9 expected credit losses – PRA publishes letter – 30 September 2026

David Bailey, Executive Director, Prudential Policy, has written to the chief financial officers of selected PRA-regulated deposit-takers with thematic feedback from the PRA’s review of auditor reports received in 2026 covering IFRS 9 expected credit loss (ECL) accounting and accounting for climate risk. The letter reports continued improvement in firms’ capabilities, controls and governance, while sharing feedback in three areas:

•    data governance: strengthening end-to-end accountability, data-quality controls and data lineage;
•    model risk: firms’ completeness of post model adjustments and timely identification of model performance issues; and
•    climate risk: development of more granular assessments and stronger links between scenario analysis and ECL judgements.

The PRA notes that aggregate ECL coverage is at its lowest level since before the pandemic, which does not in itself indicate under-provisioning but underlines the importance of reflecting new and evolving risks on a timely basis. For its 2027 review, the PRA has asked auditors for their views on firms’ progress in these areas and encourages firms to perform their own assessments and to share them with their auditors.

Financial Conduct Authority 

COREPRU 7: Overall risk assessment – FCA publishes finalised guidance – 30 September 2026

The FCA has published Finalised Guidance FG26/9, providing non-Handbook guidance on the overall risk assessment required in the FCA’s Core Prudential sourcebook (COREPRU 7). COREPRU is the FCA’s integrated prudential sourcebook, which brings together core prudential requirements applying across different types of solo-regulated FCA firm.

The guidance is illustrative and non-exhaustive and does not prescribe a single methodology. It explains how firms can link their business model, risk appetite, financial resource planning and wind-down planning into one coherent process. The guidance aims to help firms meet their obligations in a way that is proportionate to their size and complexity, reducing the risk of financial harm to themselves, their customers and markets. 

The guidance comes into force on 25 October 2027.

Overall risk assessment for CRYPTOPRU firms – FCA publishes finalised guidance – 30 September 2026

The FCA has published Finalised Guidance FG26/10 on how cryptoasset firms should comply with their overall risk assessment obligations in CRYPTOPRU 7. CRYPTOPRU is the FCA’s prudential sourcebook for cryptoasset firms.

The guidance is illustrative and addresses cryptoasset-specific risks (including market, leverage, credit, liquidity, operational and concentration risks) and severe-but-plausible stress scenarios such as cyberattacks, private-key loss, exchange or trading-venue failure, stablecoin de-pegs and withdrawal surges. It sets out expectations on recovery and contingency funding, wind-down (including custody-asset distribution and the unwinding of stablecoin backing assets), own-funds thresholds, a 90-day stressed cashflow forecast and a 12-month funding profile, with specific provisions for qualifying stablecoin issuers.

The guidance comes into force on 25 October 2027.

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Insurance

European Insurance and Occupational Pensions Authority 

Better regulation and supervision 2.0 – EIOPA publishes note – 28 September 2026

The European Insurance and Occupational Pensions Authority (EIOPA) has published a follow-up note on its “approach to simplification” published in April 2025, which takes stock of progress and sets out further steps to reduce unnecessary complexity and burden across the insurance and occupational pensions sectors. EIOPA emphasises again that these simplifying actions will not compromise policyholder protection, financial stability or supervisors’ ability to oversee the market.

EIOPA stresses that simplification must be guided by a European perspective, placing collective interests above national specificities and reducing fragmentation in rules and supervisory practice. Measures already taken include cutting quarterly and annual Solvency II reporting templates for solo undertakings by 26% and 30% respectively (and by 36% and 44% for small and non-complex undertakings); reviewing 25 sets of Guidelines and shortening them by around a third; implementing a new Solvency II proportionality framework and making bottom-up insurance stress tests less frequent. Looking ahead, EIOPA calls for earlier and more structured involvement in the legislative process, greater ‘supervisory unity’, robust impact assessments and integrated and digital-friendly data reporting.

Union-Wide Strategic Supervisory Priorities 2027-2029 – EIOPA publishes Strategic Supervisory Priorities – 30 September 2026

EIOPA has published its Union-Wide Strategic Supervisory Priorities (USSP) for the 2027-2029 cycle, together with the insurance Focus Areas for 2027, which national competent authorities must take into account when drawing up their work programmes.

Grounded in EIOPA’s Strategy towards 2030, the USSP identifies two strategic priorities: (i) enhancing resilience in a structurally evolving and volatile risk environment and (ii) supporting societal resilience by mitigating conduct risks in business models and distribution. The Focus Areas for 2027 are continuity and contingency planning (including digital operational resilience) and supporting societal resilience by mitigating conduct risks in business models and distribution (including conflicts of interest that may lead to poor product design, assessment of affordability trends and the supervision of digital distribution mechanisms such as AI chatbots).

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