General
HM Treasury
Financial Policy Committee remit and recommendations - HM Treasury publishes Budget 2026 remit letter - 28 October 2026
The Chancellor of the Exchequer has written to the Governor of the Bank of England setting out HM Treasury’s remit and recommendations for the Financial Policy Committee (FPC) alongside the Autumn Budget 2026. The letter specifies the government’s economic policy and the matters the FPC should regard as relevant to the Bank’s Financial Stability Objective and to supporting the government’s growth and competitiveness agenda.
The remit asks the FPC to continue prioritising resilience in the non-bank financial sector and market-based finance, including risks in private markets, and to maintain its focus on the stability of core sterling (gilt and gilt repo) markets and on global and geopolitical risks. It also highlights non-financial risks, including cyber and operational resilience, the critical third parties regime, and the financial stability implications of emerging technologies such as artificial intelligence, as well as the risks posed by climate change and nature.
On growth and competitiveness, the government welcomes the FPC’s review of bank capital requirements, including proposed reforms to the leverage framework and to the usability and releasability of capital buffers, and asks the Committee to deliver these reforms quickly and to address overlaps in capital requirements relating to domestic exposures. The remit also asks the FPC to use its loan-to-income mortgage framework to target improved access to home ownership without prejudicing financial stability, and to support the government’s Financial Services Growth and Competitiveness Strategy.
Financial Conduct Authority and Prudential Regulation Authority
Senior Managers & Certification Regime Review: Phase 2 - FCA and PRA publish consultation papers -22 October 2026
The FCA and PRA have published parallel consultations proposing a second phase of reforms to streamline the Senior Managers and Certification Regime (SM&CR), with the aim of reducing the regime’s regulatory burden by 50% and cutting the number of roles at banks and insurers requiring regulatory pre-approval by 40%, while maintaining robust individual accountability.
The FCA’s CP26/37 proposes making several senior management functions (including SMF5 and SMF10-15) notified rather than pre-approved. It also proposes removing the Certification Regime, retiring the Directory and raising thresholds so fewer firms are classified as enhanced firms. Further proposals include:
- removing requirements for ongoing submissions to the regulators of Statements of Responsibilities and Management Responsibilities Maps;
- extending the temporary SMF cover (“12 week”) rule; and
- raising the threshold for reporting non-SMF Conduct Rule breaches.
The FCA expects to publish final rules in H1 2027 and to implement them in H2 2027.
The PRA’s CP14/26 makes parallel changes for banks and insurers, including:
- introducing certain notified SMFs, splitting the Group Entity Senior Management Function (SMF7) into pre-approved and notified roles;
- removing the Certification Regime’s fitness and propriety assessments, certificates and regulatory references; and
- extending the temporary SMF cover (“12 week”) rule.
The regulators estimate the package will save firms around £2 billion over a 10-year period. Both consultations close on 22 January 2027.
Bank of England, Financial conduct authority and HM Treasury
Artificial intelligence in UK financial services - Bank of England and FCA publish fourth AI survey - 26 October 2026
The Bank of England and the FCA have published the results of their fourth survey of artificial intelligence (AI) and machine learning in UK financial services. The survey draws on responses from 196 firms across banking, insurance, investment and capital markets, non-bank lending, financial market infrastructure and payments.
AI adoption continued to rise, with 86% of respondents reporting current use of AI, up from 75% in 2024, and a marked shift towards generative AI, which accounted for 56% of all reported AI systems. AI agent deployment is now widespread, reported by 80% of respondents, but autonomy remains limited, with most firms’ agents confined to decision support rather than executing actions such as approving customer outcomes, trading or initiating payments. Third-party AI systems have become both more prevalent and more material.
Respondents identified data protection and security, third-party and supply-chain risk, and generative-AI-specific risks such as hallucinations and prompt injection as the most significant current risk drivers and pointed to cyber risk amplification and critical third-party dependencies as the systemic risks of greatest concern. Most firms reported having formal governance arrangements, with 94% having firm-wide AI policies and 84% a centralised AI or model-risk governance forum. Oversight of third-party and vendor-supplied models was the most commonly cited area of governance uncertainty. Respondents most frequently cited UK data protection and privacy requirements, and overseas regulatory requirements, such as the EU AI Act, as regulatory constraints.
Financial Conduct Authority
Market integrity in a digital age - speech by Nikhil Rathi - 22 October 2026
In a speech at the Corporation of the City of London’s annual City Dinner at Mansion House, FCA chief executive Nikhil Rathi argued that the UK must move faster and focus on outcomes to protect market integrity without holding back innovation as technology accelerates.
Mr Rathi warned that the UK risks a dangerous “innovation delta” in which the institutions regulating markets lag behind rapid change in AI, decentralised finance, 24/7 trading and parallel market structures, heightening threats of volatility, concentration risk, new forms of market abuse and cross-border financial crime. In response, Mr Rathi stated that the FCA would make better use of technology and intelligence, move away from tick-box compliance, and will aim to avoid over-reliance on new rules. The speech emphasised that no single agency can meet these challenges alone and called for stronger partnerships between regulators, industry, government and civil society, pointing to a forthcoming FCA–Bank of England roadmap on digital assets and to recent joint operations with law enforcement to disrupt organised criminal gangs.
Prudential Regulation Authority
The PRA’s second decade - speech by Katharine Braddick - 22 October 2026
In her first Mansion House speech as PRA Chief Executive Officer, Katharine Braddick set out her vision for the PRA’s second decade, announcing that she will publish the PRA’s first five-year strategy next year, centred on four priorities: resilience, growth, innovation and transparency.
She said the PRA will significantly increase its focus on firms’ operational and cyber resilience, including creating a new directorate as a centre of excellence and consulting jointly with the FCA on a new supervisory statement by the end of the year. On growth, she highlighted the new captive insurance regime and the recently consulted framework for automatically indexing regulatory thresholds to nominal GDP. On transparency, Ms Braddick confirmed that the PRA would consult in spring 2027 on changes to improve firms’ access to internal models for residential mortgages and conduct an independent review of the UK’s implementation of hybrid mortgage model requirements.
Banking and finance
Council of the European Union
Payment Services Regulation -Council of the EU publishes first-reading position - 21 October 2026
The Council of the EU has published its position at first reading on the proposed Regulation on payment services in the internal market (the Payment Services Regulation, or PSR), which will amend Regulations (EU) No 1093/2010, (EU) No 260/2012, (EU) 2017/2394 and (EU) 2021/1230. The PSR forms part of the EU’s wider review of Directive (EU) 2015/2366 (PSD2) and, together with a parallel Payment Services Directive, moves the conduct-of-business rules for payment and electronic money services into a directly applicable Regulation.
The Council’s text consolidates the rules governing payment service providers, electronic money institutions and ATM deployers, and extends the framework in several respects. Key elements include, for example: (i) bringing electronic money services within the same conduct-of-business framework as payment services, while preserving e-money specificities; (ii) strengthening open banking; (iii) improving payment institutions’ access to credit institution accounts and addressing ‘de-risking’ by requiring credit institutions to give detailed written reasons for refusing or closing accounts; (iv) enhancing consumer protection against fraud; and (v) extending transparency obligations on fees and charges, including for ATM cash withdrawals.
PSD3 - Council publishes first-reading position on the Payment Services Directive - 23 October 2026
The Council of the EU has published its position at first reading on a new Directive on payment services in the internal market (8535/26), which will amend Directive 98/26/EC and Regulation (EU) 2023/1114 and repeal the Electronic Money Directive (2009/110/EC) and the second Payment Services Directive (Directive (EU) 2015/2366) (PSD2).
The Directive forms part of the EU’s wider payments package (alongside the PSR above), separating the authorisation and supervision of payment institutions, which it governs, from conduct-of-business rules, which move to the PSR. It responds to the Commission’s review of PSD2, which identified divergent implementation and enforcement that distorted competition and encouraged regulatory arbitrage and forum shopping.
The Directive also merges the regime for electronic money institutions into the framework for payment institutions, while preserving distinct features such as initial capital and own-funds requirements and the rules on the issuance, distribution and redemption of electronic money, and introduces a single authorisation for providers of payment services that do not take deposits.
HM Treasury
Securitisation: draft amending regulations laid before Parliament - HM Treasury publishes the draft Securitisation (Amendment and Miscellaneous Provisions) Regulations 2026 - 27 October 2026
A draft statutory instrument, the Securitisation (Amendment and Miscellaneous Provisions) Regulations 2026, has been published on legislation.gov.uk, having been laid before Parliament under the Financial Services and Markets Act. The draft Regulations amend the Securitisation Regulations 2024 and the Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) Order 2014.
The principal changes made by the draft Regulations include, among others, removing provisions relating to securitisation repositories, including Part 5 of the Securitisation Regulations 2024; replacing the due diligence requirements for occupational pension schemes with a single substituted regulation 32B, which broadly requires trustees or managers that are not the originator, sponsor or original lender to comply with the FCA due diligence rules applicable to institutional investors before and while holding a securitisation position; and converting the FCA’s duty to make due-diligence rules for small, registered UK AIFMs into a power.
The Regulations are due to come into force on 1 January 2027, with certain provisions, including the removal of the securitisation repository regime, coming into force on 25 May 2027.
Financial Conduct Authority
Fair value in consumer finance - FCA publishes good and poor practice findings - 29 October 2026
The FCA has published findings from its supervisory work on how consumer finance firms assess, evidence and monitor fair value under the Consumer Duty. The findings draw on reviews of fair value assessments across consumer credit lending, debt advice, credit reference and debt purchasing and collection firms, a focused review of fees and charges across a range of credit products, and supervisory work on consumer hire and third-party ownership agreements for home energy infrastructure. The findings highlight that firms which had embedded fair value showed a clear, evidenced relationship between the price customers pay and the benefits they can reasonably expect, while weaker assessments relied on assumptions or management information lacking supporting evidence.
Securities and markets
European Commission
Derivatives transparency and the OTC derivatives consolidated tape - Commission Delegated Regulation (EU) 2026/1763 published in the Official Journal - 23 October 2026
The Official Journal has published Commission Delegated Regulation (EU) 2026/1763 of 13 July 2026, amending the MiFIR regulatory technical standards on transparency requirements for trading venues and investment firms in respect of derivatives.
The Regulation amends Delegated Regulation (EU) 2017/583 to introduce static minimum thresholds and a static determination of liquidity for the pre- and post-trade transparency regime for derivatives. It also amends Delegated Regulation (EU) 2017/2194 so that package orders are subject to pre-trade transparency only where each component is itself subject to those requirements. Amendments to Delegated Regulation (EU) 2025/1155 specify the input and output data for the OTC derivatives consolidated tape and exclude exchange-traded commodities and notes from the bond consolidated tape. The Regulation also corrects Delegated Regulation (EU) 2017/587. It enters into force on the twentieth day following publication, although certain provisions apply from 1 March 2027.
HM Treasury
The Central Counterparties (Equivalence) (Indonesia and the People’s Republic of China) Regulations 2026 -HM Treasury makes equivalence regulations for Indonesian and Chinese CCPs - 29 October 2026
HM Treasury has made the Central Counterparties (Equivalence) (Indonesia and the People’s Republic of China) Regulations 2026 (SI 2026/1134), together with an explanatory memorandum, determining under Article 25(6) of UK EMIR that certain legal and supervisory frameworks for certain central counterparties (CCPs) established in Indonesia and the People’s Republic of China are equivalent to the United Kingdom’s regime for the first time. The determinations are a precondition to individual CCPs being recognised by the Bank of England. The Regulations were made on 27 October 2026 and come into force on 19 November 2026, granting non-time-limited equivalence
OTC derivatives intragroup exemptions -HM Treasury makes the Over-the-Counter Derivatives (Intragroup Transactions) Regulations 2026 (SI 2026/1117) - 21 October 2026
HM Treasury has made a statutory instrument amending the intra-group transaction exemptions from the clearing obligation and the uncleared-margin risk-mitigation requirements under the UK European Market Infrastructure Regulation (UK EMIR, Regulation (EU) No 648/2012).
The Regulations revise the definition of an intragroup transaction in Article 3 of UK EMIR and replace the temporary intragroup exemption regime previously in Part 5 of the 2019 EU Exit Regulations with a permanent framework when the revocation of Part 5 takes effect. For transactions involving a third-country counterparty, counterparties may use the exemption where the UK counterparty notifies the FCA and the FCA does not object within 30 calendar days of receiving a complete notification.
Bank of England
Tokenised collateral in central clearing - Bank of England launches consultation - 29 October 2026
The Bank of England has published a consultation paper on draft supervisory expectations for CCPs seeking to accept tokenised versions of collateral that is already eligible under the proposed UK CCP Rulebook. The consultation aims to provide greater clarity on how the existing framework applies to tokenised collateral and to support the responsible adoption of tokenisation in UK wholesale financial markets, consistent with the Bank’s secondary innovation objective.
The Bank’s initial view is that the existing regulatory framework does not prevent CCPs from accepting tokenised forms of eligible collateral, and the draft supervisory statement does not create a separate regime or new obligations but sets out token-specific factors a CCP should consider when applying the existing framework, following the principle of ‘same risk, same regulatory outcome’. The draft expectations cover liquidity, valuation and interoperability; settlement finality; credit and concentration risk management; operational resilience; and custody and safeguarding. The paper also examines the opportunities and financial stability risks of tokenisation in collateral management, including faster and more automated collateral mobilisation, and seeks views on whether the expectations should extend in future to a wider range of tokenised assets such as money market fund units, gold and stablecoins.
The consultation closes on 12 February 2027.
Financial Conduct Authority
Income sharing and operational incident reporting for consolidated tape providers - FCA launches consultation - 29 October 2026
The FCA has published a consultation paper (CP26/39) on income sharing distribution and operational incident reporting for consolidated tape providers. The paper takes forward implementation of the UK equity consolidated tape, building on the framework confirmed in the FCA’s July 2026 policy statement.
The FCA is proposing an income distribution model under which all UK trading venues and Approved Publication Arrangements (APAs) that contribute data to the equity consolidated tape provider (CTP) would be eligible to receive income, determined by the relative value of the trades they submit, with a 4.5-times weighting applied to trades executed on smaller trading venues, which the FCA estimates would roughly triple smaller venues’ share of income.
The paper also proposes to extend enhanced operational incident reporting requirements to all CTPs, so that significant incidents affecting them are reported to the FCA in a timely and consistent way. The deadline for responses to the consultation is 17 December 2026, and the FCA aims to publish a policy statement in spring 2027.
Asset management
Financial Conduct Authority
Conflicts of interest in private markets - FCA publishes multi-firm review findings - 23 October 2026
The FCA has published the findings of a multi-firm review of how firms in private equity, private credit and real estate identify, manage, mitigate and disclose conflicts of interest, finding that standards vary considerably as private markets grow and business models become more complex.
The FCA found examples of good practice -strong governance, independent oversight and challenge, and comprehensive conflicts inventories - but also recurring weaknesses, particularly in cross-fund transfers and continuation vehicles, connected and multi-party transactions, gifts and entertainment, and information barriers. It was concerned that some firms’ conflicts frameworks reflected the legal form of their activities rather than their substance, and that governance and controls had not always kept pace with business growth.
The FCA expects firms to keep conflict-identification processes responsive to change, maintain controls proportionate to inherent conflict risks, set clear escalation thresholds, and treat disclosure as a supplement to, as opposed to a substitute for, managing conflicts. It will undertake targeted follow-up work and has noted separately that it is examining the use of private credit to fund consumer litigation claims.
Insurance
House of Lords Financial Services Regulation Committee
Home and travel insurance regulation - House of Lords Financial Services Regulation Committee publishes report (HL Paper 64) - 23 October 2026
The House of Lords Financial Services Regulation Committee has published a report finding that home and travel insurance products are inherently complex and consumer understanding is low.
The Committee found that intense price competition through price comparison websites, combined with product complexity, leads many consumers to focus on price rather than value, contributing to persistently high rates of declined claims, and it called on the FCA to address poor claims-handling practices, including outsourced claims handling and cash settlements. It concluded that the regulatory regime is broadly appropriate but that the real challenge lies in implementation, supervision and enforcement.
The Committee raised particular concern about the growing use of AI by consumers researching insurance and urged the FCA to accelerate its response to the Mills Review. It also criticised insufficient and inconsistent outcomes data, calling on the FCA to ensure comparable data is available and to produce a roadmap with clear timescales for delivery.
Financial crime
Financial Conduct Authority
Financial Crime Guide updates - FCA publishes consultation paper (CP26/38) - 23 October 2026
The FCA is consulting on updates to its Financial Crime Guide to help firms assess and strengthen their financial crime systems and controls as financial crime becomes more sophisticated. The Guide does not contain rules or impose new requirements.
The proposed changes update sections on fraud (reflecting multi-firm work on authorised push payment fraud and money mules), cryptoassets (ahead of FCA authorisation of certain cryptoasset activities from 25 October 2027), financial and trade sanctions (reflecting the creation of the Office of Trade Sanctions Implementation), proliferation financing, data security (including AI, synthetic identity fraud and digital assets), Banking-as-a-Service delivery models, and money laundering and terrorist financing. The consultation closes on 24 December 2026, and the FCA will publish feedback and the final amended text of the Guide in a Policy Statement.
This material is provided for general information only. It does not constitute legal or other professional advice.