Welcome to the latest edition of the Financial Regulation Weekly Bulletin.
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GENERAL
BANK OF ENGLAND
Shaping the UK’s digital financial future - Bank of England publishes speech - 29 January 2026
The Bank of England has published a speech given by Sasha Mills, Executive Director of Financial Market Infrastructure, outlining the Bank’s innovation priorities for the coming year. These are:
- progressing the systemic stablecoins regime (with the aim of finalising this by the end of this year);
- clarifying how tokenised collateral can operate under the UK European Market Infrastructure Regulation (UK EMIR), where the Bank notes that the industry is looking to the regulators for greater clarity as the safe use of tokenised assets will depend on confidence in how rights to those assets are assured and enforceable; and
- expanding the Digital Securities Sandbox to test the use of stablecoins for wholesale settlement in a controlled environment.
FINANCIAL CONDUCT AUTHORITY
Application of FCA Handbook to regulated cryptoasset activities - FCA launches second consultation - 23 January 2026
The FCA has published its second consultation paper (CP26/4) on the application of the FCA Handbook to incoming regulated cryptoasset activities established by the draft Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025. This follows on from the FCA’s first consultation paper on this subject, published in September 2025. It includes proposals on:
- how the Consumer Duty will apply to cryptoasset firms, supplemented by further non-Handbook guidance published alongside the consultation paper (GC26/2);
- the FCA’s approach to redress and dispute resolution;
- the use of credit to purchase cryptoassets;
- the application of cryptoasset safeguarding rules to firms that are conducting more than one regulated cryptoasset activity and the FCA’s proposed approach to specified investment cryptoasset custody; and
- location policy guidance for cryptoasset firms.
The deadline for responses is 12 March 2026.
Long-term impact of AI on retail financial services - FCA launches review - 27 January 2026
The FCA has published a press release announcing the launch of a review into the long-term implications of advanced AI on consumers, retail financial markets and regulators, together with a call for input.
Led by FCA Executive Director Sheldon Mills, the “Mills Review” will focus on four inter-related 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 control of the customer relationship;
- the impact on consumers, including how consumers will be influenced by AI but will also influence financial markets through new expectations; and
- how financial regulators may need to evolve to continue ensuring that retail financial markets work well.
While wholesale markets and broader societal impacts are out of scope, the review recognises that developments in these areas may indirectly influence retail financial services and will be considered where relevant. Mills notes that “my purpose is not to claim certainty about the pace or direction of AI development. I want to explore a range of plausible futures and offer clear recommendations".
The deadline for responses is 24 February 2026, and feedback is expected to shape a series of recommendations to be reported to the FCA board in summer 2026, culminating in an external publication.
Outstanding Leeds Reforms - FCA responds to Treasury Committee - 28 January 2026
The House of Commons Treasury Committee has published a letter it has received from the FCA providing information following an oral evidence session on 16 December 2025. The letter from Nikhil Rathi, FCA Chief Executive, outlines the FCA’s plan to deliver reform at pace and details the FCA’s approach to finalising the elements of the Leeds Reforms which it has not yet implemented.
Where significant reform depends on legislation, the FCA will seek to sequence its rule changes to align with the expected legislative timetable and, where appropriate, progress in phases, starting with changes that are possible without legislation. There are, however, instances where this phased approach is not possible or appropriate, and the FCA sets out its top asks for legislative change or government action. These include legislation in relation to targeted support, consumer credit and the exemptions under the financial promotions regime. The FCA also welcomes “the Government setting out in more detail its position on risk in the system, tolerance in relation to potential harm to consumers, and impacts on market integrity".
New regulated activities for cryptoassets - FCA announces application period - 29 January 2026
The FCA has updated its webpage on the new regime for cryptoasset regulation, announcing that the application period for firms that want to undertake the new cryptoasset regulated activities will be open from 30 September 2026 to 28 February 2027.
BANKING AND FINANCE
EUROPEAN BANKING AUTHORITY
Streamlined resolution planning under BRRD - EBA publishes draft RTS - 23 January 2026
The European Banking Authority (EBA) has published a final report containing draft regulatory technical standards (RTS) on resolution plans, the assessment of resolvability and the functioning of resolution colleges under the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD), as consulted on in August 2025. The revisions aim to simplify and refocus resolution planning while improving the effectiveness of cooperation and coordination among authorities.
The draft RTS will be submitted to the European Commission for endorsement, following which they will be subject to scrutiny by the European Parliament and the European Council before being published in the Official Journal of the European Union.
IRRBB heatmap - EBA publishes report - 26 January 2026
The European Banking Authority (EBA) has published a report on the medium- and long-term objectives of its interest rate risk in the banking book (IRRBB) heatmap, including key observations and recommendations for institutions and supervisors.
Pillar 3 data hub - EBA announces go-live - 28 January 2026
The European Banking Authority (EBA) has published a press release announcing the go-live of its Pillar 3 data hub, making prudential information from all EEA institutions publicly accessible through a single, harmonised digital platform. The hub is part of the overall EU strategy to promote transparency and market discipline.
HOUSE OF LORDS FINANCIAL SERVICES REGULATION COMMITTEE
Growth and proposed regulation of stablecoins in the UK - House of Lords Committee launches inquiry - 29 January 2026
The House of Lords Financial Services Regulation Committee has launched an inquiry into the growth and proposed regulation of stablecoins in the UK, alongside a related call for evidence. In particular, the inquiry will examine the extent to which stablecoins might disrupt the traditional models of provision of financial services, including for banking and payment services. The inquiry will also assess the potential opportunities and risks that the growth of stablecoins might have on the UK’s financial services sector, and whether the proposed regulatory frameworks of the Bank of England and the FCA provide measured and proportionate responses to these risks.
The deadline for the submission of written evidence is 11 March 2026.
SECURITIES AND MARKETS
FINANCIAL CONDUCT AUTHORITY
T+1 settlement - FCA updates webpage - 26 January 2026
The FCA has updated its webpage on the UK market moving to a T+1 settlement cycle for securities trades on 11 October 2027, to reflect 2026 actions. The FCA states that firms should start making their planned changes to systems and processes and be able to test those changes by the end of the year. The FCA explains that this can include changing and testing operational systems and processes, agreements with third-party providers, and counterparty arrangements. Firms should also be implementing appropriate automation, as this may increase their processing capacity.
UK bond consolidated tape provider - FCA announces appointment - 28 January 2026
The FCA has published a webpage announcing that it has signed a contract with Etrading Software (ETS), appointing it to deliver the UK bond consolidated tape. ETS, a global provider of technology infrastructure to financial institutions and industry initiatives, has launched a webpage setting out key milestones and providing technical information for data contributors and users of the bond consolidated tape.
ASSET MANAGEMENT
THE INVESTMENT ASSOCIATION
T+1 settlement transition for the UK, EU, and Switzerland - IA publishes report - 26 January 2026
The Investment Association (IA) has published a report on navigating the UK, EU and Swiss settlement transition from a T+2 to a T+1 settlement cycle, produced in collaboration with asset and wealth management consultancy Alpha FMC. The T+1 transition is currently targeted for 11 October 2027.
Aimed at asset managers, fund administrators and custodians, the document provides a practical roadmap for the transition, highlighting the critical operational, technological and liquidity challenges which firms could face. Among other things, the IA recommends that firms should have a fully resourced and governed T+1 transition programme, accelerate automation across the post-trade lifecycle, and review and strengthen FX operating models.
INSURANCE
FINANCIAL CONDUCT AUTHORITY
Distribution of pure protection products to customers - FCA publishes market study interim findings - 29 January 2026
The FCA has published its interim findings from a market study (MS24/1.4) into the distribution of pure protection products to retail customers. The FCA found that, for those consumers who have taken out protection insurance, the market largely works well. There is a wide range of products, most consumers can claim when they need to, and the cost of cover has remained stable in the last few years.
The FCA also found, however, that 58% of adults do not hold pure protection products, even though many could benefit from them. To remedy this gap, the FCA is considering various options, such as improving awareness through increased use of prompts or trigger points, as well as targeted support for pure protection products.
The deadline for responses to these findings and proposed remedies is 31 March 2026. Ahead of the final report, the FCA will engage with stakeholders to agree the work to take forward on the protection gap, organising workshops with stakeholders in spring 2026. The FCA aims to publish its final report in Q3 2026.
FINANCIAL CRIME
ANTI-MONEY LAUNDERING AUTHORITY
Anti-money laundering risk assessment models - AMLA launches data collection exercise - 26 January 2026
The EU’s Anti-Money Laundering Authority (AMLA) has published a press release announcing that it plans to launch a data collection exercise to test and calibrate its risk assessment models. These models serve two purposes: to inform the selection, taking place in 2027, of up to 40 entities for AMLA’s direct supervision starting in 2028, and to ensure that money laundering risks of financial institutions are assessed consistently by supervisors across the EU.
The data collection will involve two groups of financial institutions: (i) those that may be eligible for AMLA’s direct supervision; and (ii) a representative sample of entities likely to remain under national supervision. The exercise is set to start in March 2026. Once the models have been fully tested and calibrated, AMLA will establish the final list of entities eligible for direct supervision. National supervisors will then collect data points from the identified eligible entities in early 2027, which will inform AMLA’s subsequent selection of the 40 directly supervised entities.
OFFICE OF FINANCIAL SANCTIONS IMPLEMENTATION
Use of cryptoassets to evade financial sanctions - OFSI publishes blog - 28 January 2026
The Office of Financial Sanctions Implementation (OFSI) has published a blog on its work with partners to tackle the abuse of cryptoassets to evade sanctions, where OFSI states that sanctions enablers are increasingly turning to cryptoassets to move and hide illicit funds.
The blog discusses OFSI joining forces with the Crypto Cash Fusion Cell (CCFC), a pilot multi-agency partnership which brings together OFSI, the National Crime Agency, the FCA, HMRC, the Metropolitan Police Service and the City of London Police. CCFC aims to improve the identification, understanding and response to criminal abuse of cryptoassets, and OFSI notes that shared intelligence has already led to action against potential financial sanctions breaches involving cryptoassets in the UK. OFSI uses the blog to state that the message for the sector is clear: the use of cryptoassets to evade sanctions is treated no differently from the exploitation of traditional currencies.
ENFORCEMENT
OFFICE OF FINANCIAL SANCTIONS IMPLEMENTATION
Sanctions - OFSI imposes monetary penalty on bank - 26 January 2026
The Office of Financial Sanctions Implementation (OFSI) has published a notice regarding the imposition of a monetary penalty of £160,000 on Bank of Scotland plc in accordance with section 146 of the Policing and Crime Act 2017 (PACA).
The penalty was imposed for breaches of the Russia (Sanctions) (EU Exit) Regulations 2019 (the Regulations), namely regulation 11 (dealing with funds) and regulation 12 (making funds available). Between 8 February and 24 February 2023, Bank of Scotland processed 24 payments, totalling £77,383.39, to or from a personal current account held by an individual designated under the Regulations.
A penalty of £320,000 would have been imposed were it not for the voluntary disclosure discount.
Reform of OFSI’s enforcement processes - OFSI publishes consultation response - 29 January 2026
HM Treasury has published the response of the Office of Financial Sanctions Implementation (OFSI) to the consultation on proposed changes to OFSI’s enforcement processes. Following positive feedback to its original consultation paper, published in July 2025, OFSI will make the following improvements to how it enforces against breaches of financial sanctions:
- doubling the maximum penalty amount OFSI can impose for a breach of financial sanctions, from the greater of £1 million and half of the total value of the breach to the greater of £2 million and the total value of the breach;
- providing more guidance on how OFSI assesses cases, including through publishing a new assessment matrix;
- introducing a settlement scheme to resolve certain enforcement cases, and an early account scheme; and
- streamlining the enforcement process for information, reporting and licensing offences.
These changes apply only to OFSI’s civil enforcement powers. All proposals, except for changes to the statutory maximum penalty amount, will be implemented in the coming weeks through updates to OFSI’s public enforcement guidance. Changing the statutory maximum amount for civil monetary penalties requires legislative change and will be brought forward when parliamentary time allows.
FINANCIAL CONDUCT AUTHORITY
Enforcement Watch issue 1 - FCA launches new newsletter - 28 January 2026
The FCA has published issue 1 of Enforcement Watch, the FCA’s new newsletter designed to cover insights and themes from its enforcement work. The first issue covers the FCA’s publicity policy in action, enforcement case priorities and international partnerships. Of particular interest, the FCA explains why it decided that The Claims Protection Agency Limited (TCPA), an authorised claims management company, met the ‘exceptional circumstances’ test for naming a firm or an individual under an enforcement investigation.
Also of interest is the FCA’s breakdown of the 23 enforcement operations it has opened since 3 June 2025 by category of suspected misconduct. These include six potential consumer duty breaches by firms, particularly in relation to fair value for consumers. Two of the FCA’s consumer duty investigations concern insurance firms, and these were the most serious cases identified in the FCA’s multi-firm work.
This material is provided for general information only. It does not constitute legal or other professional advice.