The Single Resolution Board (SRB) has published its approach to simplification. The SRB states that it is working to simplify its own processes and approaches, which will result in fewer deliverables requested from banks, greater stability and predictability in data requirements and policies, and faster interactions. The SRB's work on simplification is guided by four core principles: supporting competitiveness, supporting Banking Union integration, focusing on actions that enhance efficiency without compromising resolvability, and acknowledging that cooperation and trust are critical to effective crisis management. The SRB outlines its ongoing actions related to simplification, focusing on (i) streamlining information and reporting requirements; (ii) adjusting the frequency and intensity of resolution planning and testing; and (iii) providing clear, predictable, and stable guidance to enhance transparency and efficiency.

Key measures include reducing the burden of data requests, decreasing the frequency of mature deliverables and simplifying the prior permissions regime for MREL instruments in line with SRB practices to make authorisation more agile. The SRB is recommending legislative changes allowing the move to a two- or three-year resolution planning cycle, to further reduce burden for authorities and banks, to focus resolution planning more on specific elements, and to facilitate work on operationalisation and testing. The SRB is also exploring the development of digital solutions to facilitate the processing of information.

The Council of the EU and the European Parliament (EP) have reached a provisional political agreement on an updated retail investment strategy package to empower and protect consumers and increase competitiveness in the EU's financial markets. The package takes the form of a directive containing targeted amendments to a number of other EU directives in the area of financial services such as the Markets In Financial Instruments Directive (MIFID), the Solvency II Directive, the Directive For Undertakings For Collective Investment In Transferable Securities (UCITS) and the Alternative Investment And Managers Directive (AIFMD), and a regulation amending the Packaged Retail And Insurance-Based Investment Products (PRIIPs Regulation).

The Council of the EU and EP confirm that agreement has been reached in the following areas:

• Value for money – firms must identify and quantify all costs borne by investors related to the investment products they advise. Products failing to offer value for money should not be released onto the market and sold to retail customers, and who should be able to compare investment products' costs, charges, performance and non-financial benefits.
• Inducements – a new test will be introduced to ensure firms act in the clients' best interests, enabling them to distinguish inducements from other fees.

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The European Banking Authority (EBA), the European Central Bank (ECB), national central banks (NCBs), and national supervisory authorities (NSAs) across the EEA have signed a Memorandum of Understanding (MoU). The MoU aims to enhance cooperation and information sharing to support non-bank payment service providers' (NB-PSPs) access to central bank operated payment systems. The MoU sets out clear principles for collaboration to achieve three clear objectives: (i) to establish cooperation between NSAs and NCBs in the EEA for the exchange of information to support NCBs in their assessment of the compliance of NB-PSPs with requirements for granting access to central bank-operated payment systems in the EU; (ii) to establish procedures in a cross-border scenario for the NCB operating the payment system in the host member state to notify the NSA of the home member state about the NB-PSP' application and the NCB's decision regarding its participation; and (iii) to harmonise the processes and procedures across the EEA for the exchange of information between NSAs and NCBs, to the extent possible, by specifying the types of information to be shared, the timing and means of such exchange.

The European Securities Markets Authority (ESMA) has published a report with amended guidelines on liquidity management tools (LMTs) of Undertakings for Collective Investment in Transferable Securities (UCITS) and open-ended Alternative Investment Funds (AIFs). The amendments aim to align with the regulatory technical standards (RTS) adopted by the European Commission on 17 November. To ensure consistency between the guidelines and the RTS, ESMA has made some targeted amendments to the guidelines in two areas: (i) the inclusion of investor-level redemption gates to mitigate first-mover advantage, and (ii) the calculation of implicit transaction costs for anti-dilution LMTs, which should only be considered where appropriate to the fund's investment strategy and estimated on a best-effort basis. The guidelines will be translated into all official EU languages and published on ESMA's website. National competent authorities will have two months to notify ESMA on whether they comply or intend to comply with the guidelines. The updated guidelines will apply from the RTS application date (which is specified as 16 April 2026), with a 12-month transitional period for existing funds.

The European Banking Authority (EBA) has published a letter sent to the European Commission (EC) with the outcome of its EU AI Act mapping exercise. In January 2025, the EBA established a dedicated workstream to map the requirements on high-risk AI systems under the EU AI Act against relevant provisions in EU banking and payments regulation, with a focus on the use of AI for creditworthiness and credit scoring. The EBA confirms that, although the EU AI Act identifies overlaps between some requirements on high-risk AI systems and EU financial sector law and envisages targeted derogations and other ways to address this (such as integration or combination of requirements), it does not envisage such derogations for other requirements on high-risk AI systems (e.g. human oversight, data governance, cybersecurity) which are already widely regulated under EU financial services law.

The EBA highlights that the Digital Operational Resilience Act framework extensively covers the cybersecurity and business continuity requirements set out in the EU AI Act and that the Capital Requirements Regulation and Capital Requirements Directive IV requirements already provide a comprehensive and technology-neutral governance and risk management framework that can be applied to supervising the use of AI tools. The EBA sets out in an annex to its letter, a table identifying how EU financial services law already addresses relevant EU AI Act requirements. The EBA believes the table will be useful to the EC when producing the guidelines under Article 96(1)(e) of the EU AI Act on the interplay between the EU AI Act and EU financial services law and managing any regulatory overlaps.

HM Treasury (HMT) has launched its consultation on the repeal and replacement of the UK Benchmarks Regulation (UK BMR), which would replace the UK BMR regime with a new Specified Authorised Benchmark Regime. The new regime would focus regulatory oversight on benchmarks and administrators that may pose systemic risks to UK markets, removing the current obligation for authorised firms to use benchmarks on the FCA register.

HMT would designate benchmarks and administrators as "specified", taking advice from the UK Financial Conduct Authority (FCA), and publish those designations; the FCA would then set and consult on firm‑facing requirements. The consultation does not propose any voluntary opt-in regime. The scope of the regime would depend on whether benchmarks and administrators satisfied criteria which would be set in legislation.

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The European Securities Markets Authority and the New Zealand Financial Markets Authority (FMA) have published a Memorandum of Understanding (MoU) establishing cooperation arrangements under the Benchmarks Regulation (BMR). This follows Implementing Decision (EU) 2025/2197, published in the Official Journal of the European Union in October, which grants equivalence to New Zealand's legal and supervisory framework for benchmarks. The MoU sets out mechanisms for the exchange of information, including prompt notifications of breaches and with procedures concerning the coordination of supervisory activities, including on-site inspections in exceptional cases. While ESMA does not have direct supervisory powers over New Zealand administrators, it relies on the FMA's enforcement capabilities and commits to ongoing cooperation to ensure compliance with BMR-equivalent standards.

The Single Resolution Board (SRB) has published its expectations on valuation capabilities (EoVCs). Crisis readiness and, in particular, valuation in crisis, is a key element of the Single Resolution Mechanism's Vision 2028 strategy. The aim of the EoVCs is to ensure that a minimum expected set of data is available to the SRB on a permanent basis to support valuations. Banks are expected to consider the expectations when implementing Principle 5.2 of the SRB's Expectations for Banks which requires banks to have management information systems in place for valuations. The main components of the EoVCs are: (i) data requirements in the form of a Valuation Data Index, consisting of structured and unstructured information; (ii) Data Repository for Resolution functionalities; and (iii) expectations on the structure and content of valuation playbooks. The EoVCs will supersede the standardised valuation dataset published by the SRB in December 2020. The timeline for banks to implement the EoVCs are set out on a separate webpage. The SRB expects banks to comply with its expectations for DRR functionalities by 31 December 2027, for the VDI by 31 December 2028, and regarding the valuation dataset and valuation playbooks by 31 December 2029.

The UK Financial Conduct Authority (FCA) has published an engagement paper launching a review of market risk capital requirements for FCA investment firms. The IFPR sets specific prudential requirements for FCA investment firms, including rules on how much capital they must hold to cover potential losses from investments. These requirements are currently based on the UK Capital Requirements Regulation (UK CRR), which was originally designed for banks. The FCA notes that the harm caused by an investment firm failing may be less than that of a bank, suggesting scope for more proportionate capital rules.

The review will focus primarily on the current requirements in the FCA's prudential MIFIDPRU sourcebook specifically sections 4.11 (trading book and dealing on own account: general provisions), 4.12 (K-NPR requirement), and 4.13 (K-CMG requirement), as well as the corresponding sections of the UK CRR as it stood on 31 December 2021.

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The UK Financial Conduct Authority (FCA) and the UK Payments Systems Regulator (PSR) have published a joint update on the delivery of commercial variable recurring payments (cVRPs) as part of their open banking work. VRPs are an open banking technology that allow users to securely authorise trusted third parties to manage recurring transactions. The summary report highlights significant progress in 2025, with VRPs now accounting for 16% of open banking transactions, with much of the growth occurring through 'sweeping VRPs'. The FCA has been working with industry to advance VRPs for broader commercial use, in line with the National Payments Vision to build a competitive UK open banking market and accelerate rollout to 'phase 1' use cases. This year, 31 firms came together to establish a new UK Payments Initiative (UKPI) to drive VRP adoption for 'phase 1' use cases, including utilities, financial services, and government payments. Market momentum is growing, with additional players developing VRP schemes and transaction testing already in progress. In relation to UKPI, industry has agreed on a first-phase commercial model and the FCA expects the first live payments under the UKPI scheme will take place in the first quarter of 2026.

By the end of 2026, the FCA will assess industry-led cVRP growth and incorporate lessons from phase 1 into a long-term regulatory framework, developed in collaboration with HM Treasury (HMT). HMT is expected to introduce legislation in 2026 granting the FCA new powers to set open banking rules, and the FCA intends to consult on new rules for the long-term regulatory framework before the end of the year. The framework will be the foundation for expanding cVRPs into e-commerce and wider use cases.

The UK Financial Conduct Authority (FCA) and UK Payments Systems Regulator (PSR) have issued a joint letter to HM Treasury (HMT) (dated 11 November) providing an update on their progress against the 2024 recommendations HMT set for payments regulation and outlining focus areas through to 2026.

Key forward-looking priorities include:

• Co-ordination - the regulators set out how they have been working in an increasingly collaborative way to ease congestion in payments regulation.
• Open banking and open finance – the FCA has established a new department incorporating FCA and PSR capabilities, replacing the Joint Regulatory Oversight Committee (JROC) and streamlining decision-making for open banking and open finance. The FCA is working with industry to establish a future entity for open banking ahead of developing the statutory instrument with HMT and subsequently the long-term regulatory framework for open banking. In addition, the FCA has launched the smart data accelerator, with applications currently open for two prioritised open finance use cases in SME lending and mortgages. The FCA will publish a roadmap for this in early 2026, with regulatory foundations in place during 2027. The FCA is also collaborating with the Department for Business and Trade on cross-sector data sharing.

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The European Securities Markets Authority (ESMA) has issued a public statement outlining transitional provisions under the Benchmark Regulation (BMR) review. Benchmarks provided by third-country administrators that apply for recognition or endorsement by 31 December may continue to be used in the EU unless ESMA refuses the application. ESMA has also confirmed that administrators already listed in the BMR register as authorised, registered, recognised, or endorsing will retain their status until 30 September 2026 and will not need to reapply, provided they remain within the scope of the revised BMR on or before such date. ESMA or competent authorities have until 30 September 2026 to designate as significant a benchmark provided by an administrator that was included in the register on 31 December 2025.

The UK Financial Conduct Authority (FCA) has published three consultation papers as the next step in shaping the UK's crypto rules. These consultations complement the final draft statutory instrument (the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025) published by HM Treasury and laid before the UK Parliament on 15 December. The deadline for responses to all three of the consultation papers is 12 February 2026. Final rules and guidance in policy statements are expected in 2026.

The first consultation is CP25/40 on regulating cryptoasset activities, which sets out the FCA's proposed rules and guidance for some of the new cryptoasset activities introduced through the draft statutory instrument and which were not covered previously in CP25/14 and CP25/15. These activities include: (i) operating a trading platform; (ii) intermediaries; (iii) lending and borrowing; (iv) staking; and (v) the approach for decentralised finance.

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The UK Financial Conduct Authority (FCA) has published feedback statement FS25/6 setting out its response to feedback received to its June discussion paper on the future of the mortgage market, and action the FCA will take as part of a longer‑term plan to modernise its mortgage rules.

The FCA plans targeted reforms across four key themes:

• Expanding access for first-time buyers and underserved consumers: The FCA will consult (with the UK Prudential Regulation Authority) on loan-to-income (LTI) ratio requirements in Q1 2026. It will also consult on responsible lending rules in 2026.
• Enhancing later-life lending: The FCA will review retirement interest-only requirements to enhance accessibility, explore ways to improve advice to help people confidently plan for later life, and conduct a focused market study to ensure the lifetime mortgage market can meet the changing needs of future customers.
• Enabling innovation: The FCA will continue to support innovation and adoption of new technology through its innovation services, including its Open Finance Tech Sprint, its Supercharged Sandbox and its AI live testing. It also wants to explore changes to disclosure and financial promotion rules to support innovation and smoother digital journeys. It will do this as part of its consumer duty review.

Protecting vulnerable consumers: The FCA will work with partners to support people affected by financial abuse and help those using a mortgage to manage or consolidate debt.

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The European Banking Authority (EBA) and the European Central bank (ECB) have published their joint 2025 report examining payment fraud trends across the EU/EEA from H1 2022 to H2 2024. The report confirms that strong customer authentication (SCA), mandated under the revised Payment Services Directive since 2020, remains effective in reducing fraud, particularly for card payments. However, overall fraud losses rose to EUR4.2 billion in 2024 (up from EUR3.5bn in 2023). Credit transfer fraud accounted for EUR2.2bn, while card payment fraud reached EUR1.3bn, with losses significantly higher for transactions outside the EEA where SCA is not required. The EBA and ECB stress the need for adaptive security measures and continued monitoring to address evolving fraud risks. For more information, you may like to read our blog post "Key takeaways from the EBA and ECB joint 2025 report on payment fraud".

The European Securities and Markets Authority (ESMA) has published its final report under the MiFIR Review on derivatives transparency, package orders, and the over-the-counter (OTC) derivatives consolidated tape input and output data. The final report includes ESMA's assessment and feedback received to the MiFIR Review consultation package published in April, covering the new MiFIR transparency regime for exchange-traded derivatives (ETD) and OTC derivatives and the corresponding amendments to Commission Delegated Regulation (EU) 2017/583 2 on transparency for non-equity instruments ("RTS 2").

Based on the new scope of derivatives subject to transparency, it sets the approach for the liquidity determination relevant for pre-trade waivers and introduces amendments to post-trade transparency fields and flags.

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The draft Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025 were laid before the UK Parliament, accompanied by an explanatory memorandum. The statutory instrument (SI) introduces a comprehensive UK regulatory framework for cryptoassets under the Financial Services and Markets Act 2000 (FSMA).

Specifically, the legislation amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) to:

• Define the categories of cryptoassets that will be regulated under the regime: "qualifying cryptoassets" which includes "qualifying stablecoins" and "specified investment cryptoassets".
• Specify certain activities related to these categories of cryptoassets as regulated activities, so that any persons carrying on those activities by way of business needs to be authorised for that activity by the UK Financial Conduct Authority (FCA). These new regulated activities include issuing qualifying stablecoin, safeguarding of qualifying cryptoassets and relevant specified investment cryptoassets, operating a qualifying cryptoasset trading platform, dealing in qualifying cryptoassets as principal or agent, or arranging deals in qualifying cryptoassets, and qualifying cryptoasset staking.

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The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) on the treatment of structural foreign exchange (FX) positions under the Capital Requirements Regulation (CRR). The draft RTS, developed under Article 104c of the CRR (inserted by the CRR III), build on the EBA's 2020 guidelines and were consulted on in October 2024. Most provisions from the existing EBA 2020 guidelines are retained, with a few notable changes including: (i) allowing institutions to consider only credit risk own funds requirements when determining the maximum open position that neutralises sensitivity to capital ratios, where credit risk is the main driver of ratio variability; (ii) providing further guidance on how institutions should remove FX risk positions from own funds requirements; and (iii) introducing dedicated provisions for currencies that are illiquid in the market, including those impacted by EU restrictive measures. The final draft RTS will be submitted to the European Commission for endorsement, following which they will enter into force on the 20th day following publication in the Official Journal of the European Union.

The European Central Bank (ECB) has announced it will conduct a geopolitical risk reverse stress test on 110 directly supervised banks in the Single Supervisory Mechanism in 2026. In a reverse stress test, a pre-defined outcome is set, and each bank defines the scenario in which that outcome would materialise. This exercise will complement the 2025 EBA stress test, which applied a common scenario for all banks and resulted in varying differences in their capital depletion. The 2026 stress test will focus on how geopolitical risk could affect banks' business models, who should identify relevant geopolitical events and quantify their impact. Additionally, the banks will be asked to describe how they would act to reduce that impact, if necessary, with a view to ensuring that they have robust governance and operational resilience frameworks in place.

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The UK National Audit Office (NAO) has published its report on the Bank of England's (BoE) Real-Time Gross Settlement (RTGS) renewal programme. The RTGS is a core part of the UK's financial infrastructure, and the Bank of England launched the renewed system in April. The report, accompanied by a summary, examines whether the BoE managed the programme effectively to achieve a new system resilient to future developments and risks, and whether it identified wider learning from the programme. The NAO concludes that the BoE demonstrated good practice in digital transformation and risk management, with delays limited to 18 months and cost increases deemed reasonable given the programme's complexity. With the new RTGS now operational, the BoE plans to improve functionality over the next two to three years and will need to set long-term priorities to maintain and improve the system.

The NAO recommends the BoE:

• Applies lessons learned across other digital and business transformation projects.
• Sets clear plans for ongoing investment and resourcing to keep the RTGS and supporting services up to date.
• Understands and manages the impact of higher levels of change on RTGS users.
• Assesses the effectiveness of its interventions to widen access and reduce barriers, ensuring the best mix is in place.

The European Banking Authority (EBA) has published a single rulebook Q&A relating to the revised Payment Services Directive (PSD2). The Q&A addresses whether, under Article 68(1) of PSD2, a payment service provider (PSP) may impose general spending limits, daily or per transaction, for payment transactions initiated through specific channels (e.g., mobile banking) to mitigate fraud risk. The question also explores whether PSPs can apply different limits for domestic versus cross-border payments within the EU and whether PSPs are obliged to increase such limits upon a payment service user's (PSU) request for regular credit transfers. Additionally, the query considers the interaction between PSD2 and the Instant Payments Regulation (EU) 2024/886, particularly regarding PSU rights to set or modify limits for instant credit transfers in euro.

The UK Financial Conduct Authority (FCA) has published the findings from its multi-firm review of how wholesale banks deliver best execution in UK listed cash equities. The webpage highlights good practices and areas for improvement on issues including scope of best execution, governance and oversight, monitoring and management information, and managing conflicts of interest, with examples for firms to benchmark against. Although the review focuses on UK-listed cash equities, some findings are relevant to other products. The review, covering eight wholesale banks, found stronger practices compared to the FCA's 2014 thematic review, including improved monitoring of best execution and efforts to address examples of poor outcomes. The FCA also found no evidence that internalisation harmed client outcomes. However, the quality of management information (MI) to support senior management oversight was inconsistent, ranging from comprehensive to being either too high-level or overly complex.

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The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) have published a joint report reviewing the implementation of their margin requirements framework for non-centrally cleared derivatives. Originally introduced in September 2013, the framework's final phase of implementation was completed in September 2022. According to the report, implementation has now reached a steady state. The assessment, drawing on a 2024 quantitative impact study, member surveys, and recent international margin-related work, concludes that the framework has been effectively applied. It has materially increased the amount of margin exchanged for non-centrally cleared derivatives since 2012, enhancing financial system resilience. No material issues were identified, and no changes to the framework are proposed. However, the BCBS-IOSCO Working Group on Margining Requirements recommends ongoing monitoring through supervisory information exchange and experience sharing among member authorities to address evolving market practices.

The UK Financial Conduct Authority has published a policy statement PS25/23 setting out its final guidance on tackling non-financial misconduct (NFM) in financial services. The FCA is amending the Code of Conduct (COCON) and Fit and Proper (FIT) sourcebooks to clarify how serious workplace misconduct, such as bullying, harassment, and violence, can be a breach of the conduct rules in COCON and impact fitness and propriety assessments.

Following feedback to the July consultation, where respondents requested for additional clarity and agreed that new Handbook guidance was needed, the FCA is making the following changes:

• Including new examples and flow diagrams to help apply COCON consistently.
• Ensuring clearer alignment with employment law.
• Clarifying that managers' accountability is relative to their knowledge and authority.
• Withdrawing or amending examples and factors that risked imposing disproportionate burdens.
• Clarifying that firms are not expected to investigate trivial or implausible allegations or breach privacy law when assessing fitness and propriety.

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The UK Financial Conduct Authority (FCA) has published policy statement PS25/22, setting out near-final rules for a new regulatory framework on targeted support. Under the framework, authorised firms will be permitted to provide tailored investment and pension recommendations to groups of consumers with similar characteristics. This will direct people to products or to take actions with existing products that could put them in a better position in their financial lives. This will be done without the need to conduct individualised suitability assessments, but subject to consumer duty and product governance requirements. The government has confirmed that only authorised firms may provide targeted support. The rules cover design and delivery standards, disclosure obligations, charging and remuneration, application of existing requirements and monitoring outcomes. Following the consultation, the FCA has made the following changes to its rules as set out below.

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HM Treasury has published its consultation response on introducing a new "targeted support" regime following the advice guidance boundary review. The regime will allow authorised firms to provide tailored investment and pension recommendations to groups of consumers with similar characteristics. The government confirmed that targeted support will be established as a distinct regulated activity under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 subject to bespoke conduct standards and authorisation from the UK Prudential Regulatory Authority and UK Financial Conduct Authority (FCA).

Key changes following feedback to the draft statutory instrument and policy note include: simplified disclosure requirements aligned with FCA rules; clarification of exemptions applicable to targeted support; decision to proceed with secondary legislation enabling workplace pension providers to deliver targeted support communications under the Privacy and Electronic Communications (EC Directive) Regulations 2003 and other technical adjustments. Appointed representatives will initially be excluded from delivering targeted support, with a review planned after reforms to their regime are implemented.

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The Bank of England has published a consultation paper proposing to exempt transactions arising from post-trade risk reduction (PTRR) services from the derivatives clearing obligation under Article 4 of the UK European Market Infrastructure Regulation (UK EMIR). The proposal introduces a formal definition of PTRR services, including portfolio compression, portfolio rebalancing and basis-risk optimisation, and sets strict conditions for eligibility. To qualify for an exemption from the clearing obligation, transactions must be executed under an eligible agreement that identifies when the PTRR service becomes binding and includes supporting legal documentation.

It also needs to be part of a PTRR exercise that operates on non-discretionary, pre-set parameters, produces binding outcomes for all participants, and is not designed to circumvent the clearing obligation under UK EMIR Article 4(1). PTRR providers must establish participants' risk tolerances, provide transparency on how the exercise will operate, and ensure independence from market participants. Additional safeguards include notifying the BoE of their intention to offer PTRR services for the first time, confirming any changes or prior to ceasing providing any eligible PTRR service, and supplying details of each eligible service type to enable regulatory oversight and assess financial stability impacts. The deadline for comments is 11 March 2026. These changes are proposed to come into force three months after the publication of final rules.

The European Securities Markets Authority (ESMA) has published a statement clarifying upcoming reporting obligations under EMIR 3 (Regulation (EU) 2024/2987). The active account requirement (AAR), effective since 25 June, will require the first reporting submission by July 2026, including backlog data from June 2025 and 2026 activity. ESMA has submitted draft regulatory technical standards (RTS) on AAR conditions, adopted by the European Commission on 29 October and currently under legislative scrutiny. In the interim, ESMA will develop additional instructions on how to report according to the templates included in the RTS. This is to provide clarity for reporting entities and ensure that competent authorities receive meaningful and consistent information.

Additionally, counterparties recognised as third-country central counterparties (CCPs) under EMIR Article 7d must report annually to their competent authorities. ESMA will define the reporting content in forthcoming RTS and ITS. Until these standards are published, inconsistencies and operational burdens may occur. To ease implementation, the first Article 7d report (covering 2025 data) will be submitted with the 2026 cycle after Level 2 measures are in place. ESMA and national authorities will continue stakeholder engagement to ensure smooth EMIR 3 implementation.

The Financial Services Regulatory Initiatives Forum has published the ninth edition of the Regulatory Initiatives Grid. This sets out the regulatory pipeline for the next two years, outlining 124 live initiatives which is a 13% reduction since the last grid was published. Key priorities include implementing Basel 3.1 standards, advancing the strong and simple prudential framework and reforms to the prospectus regime and wholesale markets review. Innovation-focused measures cover stablecoin regulation, the national payments vision, and development of a UK captive insurance regime, while consumer-focused reforms include the advice guidance boundary review and regulation of buy now pay later products. The Grid also highlights efforts to streamline regulatory processes, with 45 joint initiatives across sectors, and provides indicative timelines for consultations and implementation through 2027. Separate press releases announcing the Grid have also been published by the UK Financial Conduct Authority and the Bank of England.

The Financial Services and Markets Act 2023 (Commencement No 10 and Saving Provisions) (Amendment) Regulations 2025 have been made. These Regulations amend the Tenth Commencement Regulations to ensure continuity following the revocation of certain provisions of the Capital Requirements Regulation (CRR) effective from 1 January 2026. Specifically, they: amend regulation 6 to preserve permissions granted by the UK Prudential Regulatory Authority (PRA) under Articles 26(2) of the CRR before 1 January 2026; and (ii) insert a new regulation 7 to retain Article 33(4) of the CRR, enabling the PRA to amend or revoke Commission Delegated Regulation (EU) No 523/2014 regarding regulatory technical standards for determining what constitutes the close correspondence between the value of an institution's covered bonds and the value of the institution's assets.

The UK Financial Conduct Authority has published two joint statements with regulatory partners addressing areas where firms have sought clarity on delivering targeted support. The first statement, issued with the UK Financial Ombudsman Service, explains its approach to handling consumer complaints related to targeted support. The second, published with the Information Commissioner's Office (ICO), provides guidance on communicating with consumers within the framework of existing direct marketing rules. There are two areas on which firms have asked for clarity in respect of providing targeted support. While the FCA acknowledges calls for legislative reform in this area, it notes that such changes fall within the government's remit. In this context, the FCA has welcomed the announcement by HM Treasury which has confirmed plans to introduce secondary legislation enabling workplace pension providers to send targeted support communications to members who have not opted out of direct marketing.

The European Central Bank (ECB) has contributed to the EU's ongoing simplification agenda by endorsing a series of recommendations for simplification of the EU prudential framework. A total of 17 recommendations were made by the ECB's High-Level Task Force on simplification across the regulatory, supervisory and reporting frameworks. Key proposed changes include: reducing the number of capital stack elements in the EU risk-weighted framework; expanding the scope of small banks that would qualify for a simplified regulatory framework as small and non-complex institutions (SNCI); giving the ECB Governing Council responsibility for taking a holistic view of the overall level of capital demand across the banking union; and completing the banking union, including finalisation of the European Deposit Insurance Scheme.

Although the recommendations advocate for simplification, they are based on core principles that resilience should be maintained, supervisory bodies should be able to meet their prudential objectives and international standards should be upheld. The ECB will present the recommendations to the European Commission, which is expected to present a report on the banking system in 2026.

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The European Systemic Risk Board (ESRB) has published a report accompanied by an annex, proposing to simplify its legislative tasks following a review by the High-Level Group. The ESRB currently performs around 90 tasks under EU law beyond its Regulation. Using a new scoring framework whereby tasks with lower scores may be discontinued, whereas tasks with higher scores remain unchanged, the ESRB identified approximately 30 tasks for discontinuation or streamlining, primarily by removing legal references or reducing involvement thresholds. The assessment is presented in detail in the annex.

These proposals build on previous ESRB recommendations in its 2022 Concept Note and discussions at the March 2025 European Commission Expert Group on Banking, Payments and Insurance, which called for: (i) a proportional approach to sectoral systemic risk buffer rates aligned with total risk exposure amounts; (ii) consolidation of the Capital Requirements Regulation provisions on macroprudential risk weights (Articles 124, 164 and 458) into a single section or article with simplified activation procedures; and (iii) mandatory reciprocation for systemic risk buffer and Article 458 measures, subject to materiality thresholds. The ESRB's proposals will be submitted to the EC for consideration as part of targeted legislative amendments.

The UK Financial Conduct Authority (FCA) has published a new webpage clarifying its expectations for firms promoting mainstream investment products and addressing common misconceptions about risk warnings. The FCA states that financial promotions aimed at retail customers must comply with the consumer duty and COBS rules by being fair, clear, and not misleading, and by providing a balanced view of benefits and risks. Regarding common misconceptions, the FCA states that while firms must indicate if capital is at risk, there is no prescribed wording or requirement for risk wording or separate risk warnings. Instead, firms should ensure they include contextualised, prominent risk information that supports consumer understanding without diminishing or obscuring key details within the body of promotion. They must provide a balanced view of the benefits and risks, to give consumers a fair description of the product or service. The FCA has also highlighted that generic or repeated warnings can confuse consumers and encouraged behavioural approaches to improve engagement with risk disclosures.

Commission Implementing Regulation (EU) 2025/2303 has been published in the Official Journal of the European Union. The Regulation lays down updated implementing technical standards on procedures, standard forms and templates for the provision of information required for resolution plans under the Bank Recovery and Resolution Directive (BRRD) (Directive 2014/59/EU). This Regulation repeals Implementing Regulation (EU) 2018/1624 and introduces a revised set of templates to enhance harmonisation of reporting obligations across the EU, reflecting amendments to BRRD and the experience gained by resolution authorities. Key changes include: (i) differentiated reporting requirements for resolution entities, liquidation entities, and entities belonging to resolution groups; (ii) thresholds for identifying relevant legal entities; (iii) adoption of a single data point model subject to common validation rules, and provisions to avoid duplication of data collection between competent and resolution authorities. The Regulation will apply from 30 December.

The European Banking Authority (EBA) has published its final report on draft regulatory technical standards (RTS) amending Delegated Regulation (EU) 2023/206 which supplements Regulation (EU) No 575/2013 (CRR). The EBA is mandated by Article 124(11) of the CRR to draft RTS which specify: (i) the types of factors to be considered by national authorities in assessing the appropriateness of the risk weights for exposures secured by immovable property; and (ii) the conditions to be considered for the assessment of the appropriateness of minimum loss given default values for exposures secured by immovable property. The only amendment identified to the existing RTS is an update of relevant legal references to align with the revised CRR (CRR3) framework. Following the April consultation, no changes were made to the draft RTS noting no responses were received. The RTS will now be submitted to the European Commission for endorsement before being published in the Official Journal of the European Union.

The Basel Committee on Banking Supervision (BCBS) has published its principles for the sound management of third‑party risk, replacing the 2005 Joint Forum outsourcing paper and establishing a common baseline for banks and supervisors. This follows the July 2024 consultation. The framework applies proportionately covering the full lifecycle of third‑party service provider (TPSP) arrangements and emphasises: (i) rigorous governance by the board and senior management; (ii) maintenance of a comprehensive third‑party risk management (TPRM) framework aligned with operational risk and resilience standards; and (iii) heightened expectations for critical services. Key areas covered include governance and strategy, risk assessment and due diligence, contracting, onboarding and monitoring, termination and the role of supervisors.

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The European Securities Markets Authority (ESMA) has published its final report on supervisory expectations for the management body of firms directly supervised by ESMA. The management body is defined as being the body or bodies legally appointed and empowered to set the strategy, objectives and overall direction of that firm, and which oversee and monitor decision-making and include those who effectively direct the firm's business. The concept of management body is taken to include a supervisory function and a management function.

The report sets out 12 high-level principles to guide governance and oversight arrangements for entities under its direct supervision and those seeking for ESMA registration and authorisation, including credit rating agencies, benchmark administrators of EU critical benchmarks and third-country recognised benchmarks, third-country Tier 2 (i.e., systemically important) central counterparties, data reporting service providers, securitisation repositories and trade repositories.

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The UK Prudential Regulatory Authority (PRA) has sent a letter to the Prime Minister providing an update on measures taken to align regulation with its economic growth objectives. The PRA confirms completion of four out of five key actions announced last year, including: (i) implementing the "strong and simple" capital framework for smaller banks to reduce compliance costs; (ii) launching the matching adjustment investment accelerator to boost insurers' UK investments; (iii) improving the insurance special purpose vehicle (ISPV) regime to accelerate authorisations and attract capital; and (iv) amending remuneration rules by halving the minimum bonus deferral periods for senior bankers. The fifth initiative, simplifying regulatory data reporting, has begun through the future banking data programme, with further development and prioritisation of this programme, and additional cost reductions to follow. Additional progress includes establishing a concierge service for inward investment, rationalising the PRA's "have regards" framework and reducing legislative overlap. Further reforms under the Leeds package, such as Basel 3.1 implementation and Senior Managers Regime simplification, are ongoing to enhance competitiveness and support growth.

The UK Financial Conduct Authority (FCA) has sent a letter to the Prime Minister providing an update on its growth strategy. It confirms delivery of most of the 50 pro-growth measures announced in January and outlines plans for 2026. The plans include finalising rules on stablecoins, setting out the delivery plan for open finance, reforming rules for venture capital and alternative investment fund managers and further speeding up IPO applications. The FCA also cites its plans to further overhaul mortgage rules so more people get on the housing ladder and is preparing for its expanded remit as anti-money laundering supervisor and integration of the UK Payments Systems Regulator. The letter highlights active support for firms digitising, with 31 already testing AI use cases, and commits to enabling tokenisation in asset management to drive efficiency and competition. The FCA also urges swift progress on digital ID to streamline know your customer requirements and calls for faster legislation to maintain reform momentum, including modernising the Consumer Credit Act. Finally, the FCA will use its convening power to galvanise system-wide responses to cross-cutting issues such as financial inclusion and mobilising defence investment to protect national and economic security.

The Council of the EU and European Parliament (EP) have reached a provisional agreement on the Omnibus I package on simplified rules for sustainability reporting and due diligence, as set out in the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). The co-legislators confirmed the agreement through separate press releases. This provisional agreement follows the EP's earlier rejection of its negotiating mandate.

In relation to the CSRD, it was agreed that the scope of the sustainability reporting requirements should be reduced with listed SMEs and financial holding undertakings being removed from scope, and the employee threshold increased to 1000 with a net turnover threshold of over EUR450 million being added. A transitional exemption for "wave one" companies (being companies that had to start reporting from the 2024 financial year) was also agreed for 2025 and 2026.

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Commission Implementing Regulation 2024/2475 has been published in the Official Journal of the European Union (OJ). The regulation makes amendments in relation to the implementing technical standards (ITS) on operational risk supervisory reporting of institutions for the purposes of article 430(7) of the Capital Requirements Regulation (CRR). The ITS specify uniform reporting formats and IT solutions, including instructions, for supervisory reporting requirements of institutions. The current ITS were revised in the context of the Basel III reforms and the resulting CRR amendments, with an earlier implementing regulation setting out the incoming replacement ITS, and repealing the existing ITS, published in the OJ last year. This current implementing regulation extends certain transitional provisions to reflect the postponement of the date of application of the incoming CRR own funds requirements for market risk to 1 January 2027, and to delay the repeal of the existing ITS. The implementing regulation will enter into force on 29 December.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/37, as part of the consumer duty requirements review and the workplan announced in the March feedback statement. The FCA sets out targeted amendments to reduce the administrative burden on firms in respect of UK UCITS investment powers, chapters 6 and 7 of the Client Assets Sourcebook, and certain changes to rules relating to insurance products and funeral plans. It also proposes to improve the existing support offering for smaller firms, by piloting a sector-specific directory-style guide which would signpost the relevant parts of the FCA Handbook for smaller firms and set out examples of good and poor practice. The FCA has identified the consumer finance sector as being an appropriate sector for the pilot, focussing initially on credit brokers.

The consultation paper also proposes amendments to the FCA Handbook and non-Handbook materials to remove references to historic guidance on the fair treatment of customers, and to update references to Principles 6 and 7 of the FCA's Principles for Businesses to clarify the scope of the consumer duty in areas where there may still be confusion. The deadline for comments is 27 January 2026.

The UK Financial Conduct Authority (FCA) has published an updated webpage confirming that following the closure of its consultation on capital deductions for redress (CP23/24), it will not proceed with the proposed capital deduction for redress framework. This decision reflects a realignment of regulatory priorities in light of broader changes affecting the advice market. The FCA expects firms to continue addressing redress liabilities under existing rules, including the consumer duty, and warns that it may intervene where firms fail to meet these expectations or pose a risk of harm. Supervisory focus will include provisions for redress liabilities in client book transfers and challenging firms at the gateway, with firms expected to adhere to the FCA's "polluter pays" principle as outlined in its prior communications.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/38 on enhancing fund liquidity risk management. The FCA sets out in detail the context for this consultation, citing the work carried out both in the UK and internationally in respect of liquidity risk management for collective investment schemes in recent years.

Key proposals the consultation paper seeks feedback on include:

• Requirements for authorised fund managers of undertakings for collective investment in transferable securities (UCITS) funds and non-UCITS retail schemes (NURS) to have anti-dilution tools available.
• Changes in respect of the "listed asset presumption", which is the presumption that a transferable security admitted to or dealt on an eligible market is presumed not to compromise an authorised fund manager's ability to redeem units.
• Removing the derogation from the eligibility tests for holding transferable securities and approved money-market instruments and guidance on eligible markets.
• New conflicts of interest requirement to ensure equitable treatment of unitholders.
• Updating guidelines issued by the European Securities and Markets Authority on liquidity stress testing and including the guidelines in the FCA handbook.
• Proposed guidance on effective liquidity risk management systems.

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The Bank of England (BoE) has published its report on the results of its stress test of central counterparties (CCPs). The BoE conducts regular stress tests of UK CCPs to assess their financial resilience and identify potential areas of risk, using a market stress scenario designed by the BoE to replicate an extreme, but plausible, hypothetical scenario including Bank-specified shocks to market prices and rates across asset classes and products. The results found that UK CCPs have adequate pre-funded resources to cover a severe stress scenario which includes the default of the two members whose default causes the greatest depletion of mutualised resources. This year, the stress test included an additional exploratory analysis of resilience against a larger set of extreme but plausible scenarios, beyond the core credit stress test. The BoE confirmed that this analysis gave it confidence that the CCP resources are sized appropriately. It also confirmed that there will be no public CCP stress test next year, so the next public stress test will be in 2027.

The UK Financial Conduct Authority (FCA) has published discussion paper DP25/3 as part of a set of publications forming a "landmark package to boost UK investment culture." The FCA is seeking views on how its regulatory framework can better support informed risk-taking and consumer confidence in retail investments. This work forms part of its wider five-year strategy to help consumers navigate their financial lives. The paper highlights persistent mismatches between consumers' risk appetite and actual investment choices, driven by low financial literacy and fear of scams, and explores interventions to rebalance risk. Key points for discussion are set out below.

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The UK Financial Conduct Authority (FCA) has published consultation paper CP25/36 as part of a set of publications forming a "landmark package to boost UK investment culture." The consultation sets out proposals to enhance client classification, creating a clearer boundary between retail and professional investors, and ensuring firms operating in wholesale markets are regulated proportionately and can operate with confidence when they are dealing with professional clients. Key proposals in relation to client classification are set out below.

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The UK Financial Conduct Authority (FCA) has published a statement on firms working together to manufacture products or services. The statement is targeted at firms seeking clarity on how to apply the consumer duty to co-manufacturing or other collaborative arrangements when manufacturing a product or services. The statement confirms the FCA's intention to develop proposals for consultation following the regulator's letter to the Chancellor in September, setting out its plans to address concerns about the application of the consumer duty, particularly in a wholesale context.

In the statement, the FCA confirms that it has found that firms are applying the consumer duty beyond what the FCA intended, particularly in the areas of decision-making, allocation of responsibility, liability, and outsourcing. Going forward, the FCA will be looking to consider how the scope of the application of the consumer duty could be clearer, including the current exemptions and how firms are able to rely on each other when they work in distribution chains.

For further background on the FCA's work in this area, you may be interested in our webinar on this topic, available to watch here.

The UK Financial Conduct Authority (FCA) has published policy statement PS25/20 as part of a set of publications forming a "landmark package to boost UK investment culture". The policy statement follows the FCA's consultations on the new regime for consumer composite investments (CCIs), which is a new domestic regime to replace the legacy EU regimes for packaged retail and insurance-based investment products and disclosures in respect of undertakings for collective investment in transferable securities, in December 2024 and April this year. The policy statement confirms that the following areas were the subject of substantive feedback and so have been addressed in the final rules.

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