Financial Regulation Weekly Bulletin - 23 April 2026

GENERAL

HM TREASURY, FINANCIAL CONDUCT AUTHORITY AND PRUDENTIAL REGULATION AUTHORITY 

Senior Managers Regime reform - Consultation Response and Policy Statements published by HM Treasury, FCA and PRA - 22 April 2026

The FCA and the PRA have each published policy statements on reforms to the Senior Managers and Certification Regime (FCA PS26/6 and PRA PS12/26 respectively). As previously reported in this Bulletin and explained in our client briefing [Streamlining the SMCR: Unpacking the Leeds Reforms], reforms will be implemented in two phases: Phase One covers reforms that can be delivered without legislative change, while Phase Two covers reforms that require amendments to primary legislation, including the Financial Services and Markets Act 2000 (FSMA). 

In PS26/6 the FCA confirms that it will implement the Phase One reforms largely as consulted on. This phase will involve extending the validity period for criminal records checks from three to six months, removing the requirement for checks for internal or intragroup moves, as well as giving firms 12 weeks to submit a senior management function (SMF) application. In PS12/26, the PRA also confirms that it will implement the Phase One reforms largely as consulted on, including clarifications related to the scope of the Group Entity SMF7. Most of these reforms will take effect on 24 April 2026; changes to regulatory reporting processes will take effect on 10 July 2026. The relevant FCA Handbook and PRA Rulebook instruments can be found in the appendices to each of the policy statements.

Separately, HM Treasury has published a formal response to its consultation on the Phase Two reforms. As previously trailed, this confirms the eventual removal of the certification regime from FSMA. HM Treasury will also reduce the number of SMFs and remove the requirement for regulatory pre-approval for some SMFs and legislative requirements on statements of responsibility. It will also give the regulators the power to decide whether and to what extent they will accept senior manager applications subject to time limits or conditions. The primary legislation relating to these Phase Two reforms will be introduced as soon as parliamentary time allows. The FCA and the PRA will then publish further consultations on amendments to their rules.

PRUDENTIAL REGULATION AUTHORITY

Business plan 2025/26 - published by PRA - 17 April 2026

The PRA has published its business plan for 2026/27, setting out details of regulatory initiatives that are intended to advance its strategic priorities and its primary and secondary objectives. It confirms the PRA’s continued focus on safety and soundness, policyholder protection and a proportionate and efficient approach to regulation. The plan also outlines details of the PRA's work to improve its operational effectiveness and its budget for 2026/27.

The PRA’s 2026 priorities for banks and investment firms note that it expects firms to maintain strategic risk management, operational and financial resilience and data risk management; they also highlight the PRA’s efforts to streamline regulatory reporting. The PRA’s insurance supervision priorities focus on maintaining strong risk discipline amid competitive pressures, with a particular emphasis on the life sector’s rapid growth in bulk purchase annuities and increased use of funded reinsurance. 

FINANCIAL CONDUCT AUTHORITY

Inactive appointed representatives - FCA publishes review findings - 21 April 2026

The FCA has published the findings from its review of the management of risks arising from inactive appointed representatives (ARs), based on regulatory return data submitted by 14 principal firms. The FCA comments that principals still need to have effective oversight of their ARs even where ARs do not carry out regulated activities; they should not rely on transaction oversight as a source of information. It notes that an unexplained lack of reported regulated activity is an indicator of weaknesses in principals’ governance, monitoring and oversight and risk management of their ARs. The review prompted positive change at seven of the 14 principal firms reviewed, with 11 ARs offboarded and principals strengthening their monitoring arrangements.

Innovation insights for 2025 - FCA publishes report - 20 April 2025

The FCA has published its Innovation Insights report in which it outlines what it is learning from fintech market developments and from firms' engagement with the FCA’s innovation services. The report explains “where innovation is accelerating, where risks and constraints are shifting, and what this means for safe testing and responsible scaling”.

Looking ahead to 2026-27, the FCA states that it intends to make greater use of cohort-based testing (including for fund tokenisation); it also plans to encourage greater engagement from incumbents in wholesale markets and general insurance.

Supporting fintech in the next phase of innovation - FCA publishes speech - 21 April 2026

The FCA has published a speech delivered by Jessica Rusu, FCA chief data, information and intelligence officer, on supporting fintech in the next phase of innovation. Among other things, Rusu announces the next phase of the FCA's AI Lab and confirms that the FCA does not intend to introduce new AI rules; instead, it will use learnings from the AI Lab to publish examples of good and poor practice later this year. Rusu also announces that the FCA's Scale-Up Unit has opened for expressions of interest from FCA-authorised firms.

In a related press release, the FCA confirms the names of eight firms that will comprise the second cohort for AI Live Testing.

EUROPEAN COMMISSION

Separation of activities and disclosures under ESG Ratings Regulation - European Commission adopts Delegated Regulations - 21 April 2026

The European Commission (the Commission) has adopted two Delegated Regulations supplementing Regulation (EU) 2024/3005 on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities (the ESG Rating Regulation).

The first Delegated Regulation (C(2026) 2495) contains regulatory technical standards (RTS) specifying measures and safeguards to be implemented by ESG rating providers to separate their ESG rating activities from their other activities. These measures are designed to avoid conflicts of interest that could arise where an ESG rating provider's employees who are directly involved in assessing rated items are also involved in other activities. The second Delegated Regulation (C(2026) 2503) contains RTS specifying the elements of ESG rating products to be disclosed (which includes, among other things, details of general methodology used and any data limitations).

Both Delegated Regulations will now be scrutinised by the Council of the EU and the European Parliament. They will apply from 2 July 2026, in line with the date of application of the ESG Rating Regulation.

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SECURITIES AND MARKETS

FINANCIAL CONDUCT AUTHORITY

Market soundings in UK equity capital markets - FCA publishes multi-firm review - 20 April 2026

The FCA has published the findings from a multi-firm review on market soundings in UK equity capital market (ECM) transactions in UK listed shares in wholesale banks. The FCA asked five banks active in ECM about their UK equity and equity-linked transactions over £50 million between January 2023 and June 2025 where they acted as a bookrunner. It then combined information about these transactions with order book data and transaction reporting data.

The FCA comments that its review follows the identification of some transactions where a relatively large number of investors were involved in the market sounding. Among the findings, the FCA notes that trading volumes fell by an average of 13% during the market sounding period and that firms completed transactions across a wide range of sizes, indicating that the UK equity markets have the liquidity to absorb substantial transactions. During the course of the review, some banks proposed improvements to Article 11 of the UK Market Abuse Regulation (UK MAR), including greater alignment with the EU market sounding regime.

HM TREASURY

Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 - HM Treasury publishes draft SI and policy note - 21 April 2026

HM Treasury has published a draft statutory instrument amending the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (the Cryptoassets Regulations) alongside a policy note summarising the measures.

The Cryptoassets Regulations were made in February 2026 and establish a regulatory regime for cryptoassets that will come into force in October 2027. In short, the draft SI carves UK qualifying stablecoin (UKQS) out of the new activities of dealing in qualifying cryptoassets as principal, dealing in qualifying cryptoassets as agent and arranging deals in qualifying cryptoassets. This is intended to remove undue barriers for firms seeking to provide payment services with UKQS ahead of the government's planned payment services reforms. Lending and borrowing activities involving UKQS remain within the scope of the dealing activities; in addition, firms undertaking UKQS payments will still need to obtain permission for cryptoassets safeguarding where they safeguard (or arrange safeguarding of) cryptoassets, including UKQS, on a customer's behalf. The draft SI also makes certain other minor consequential changes, as explained in the policy note.

The draft SI has been published for technical engagement with industry, with written responses invited by 22 May 2026. A consultation on the broader payment services reforms, including the longer-term treatment of UKQS payments and safeguarding, is expected to follow in Q2 2026.

A Streamlined Approach to Payment Systems Regulation - HM Treasury publishes consultation response - 21 April 2026

HM Treasury has published a response to its consultation paper on a streamlined approach to payment systems regulation, published in September 2025, which set out a proposed approach to consolidating the Payment Systems Regulator's (PSR) functions within the FCA.

The response confirms that HM Treasury intends to proceed with its plans to integrate the PSR's functions within the FCA under the Financial Services and Markets Act 2000 (FSMA) as far as practicable. HM Treasury is considering different options for the design of the legislation to deliver this intended policy outcome. It will provide further details in due course on its plans to bring forward primary legislation to deliver the changes. It intends to continue using a designation regime to bring payment systems in and out of scope of FCA regulation.

Further details about the government’s wider plans for reforming assimilated payment services law will be published in due course.

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FINANCIAL CRIME

ANTI-MONEY LAUNDERING AUTHORITY

Group-wide AML/CFT requirements and business-wide risk assessment - AMLA publishes draft RTS and draft Guidelines - 16 April 2026

The EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) has published two consultation papers under the Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (AML Regulation).

The first consultation paper contains draft guidelines on business-wide risk assessments, which requires relevant firms to take measures that are proportionate to the nature and size of their business. Comments can be made until 15 July 2026. AMLA is holding a public hearing on the draft guidelines on 28 May 2026 and intends to issue the final guidelines in Q4 2026.

The second consultation paper contains draft regulatory technical standards (RTS) on group-wide requirements and additional measures on branches and subsidiaries in third countries. Comments can be made until 15 June 2026. AMLA is holding a public hearing on the draft RTS on 20 May 2026 and will submit the final draft RTS to the European Commission by 30 September 2026.

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