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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The UK Prudential Regulation Authority (PRA) has published policy statement PS27/25 following its September consultation setting out proposals to delete certain regulatory reporting requirements for banks, building societies and designated investment firms. The consultation was part of the PRA's work to reduce the regulatory burden for those PRA-regulated firms under the regulator's future banking data review and focused on Financial Reporting (FINREP) templates. The policy statement confirms the deletion of 37 templates (as per the consultations proposals) and notes in particular feedback from respondents regarding further reforms under the future banking data review workstream. The revised rules and amended guidance will come into effect on 31 December and will apply to reporting reference dates that fall on that day.

The UK Financial Conduct Authority (FCA) has published its quarterly consultation paper No 50 inviting feedback on proposed amendments to its Handbook across reporting, fees, primary markets rules, the new Public Offers and Admissions to Trading Regulations (POATRs) framework and authorised fund concentration rules.

Key proposals include:

• Decommissioning three general insurance pricing practices returns (REP021a, REP021b and REP021d) and reducing the frequency of the baseline financial resilience report (FIN073) from quarterly to annually for firms that also submit RMA‑A and have GBP 150 million or less annual regulated revenue, while retaining quarterly submission for larger firms and those not submitting RMA‑A.
• Cutting the administrative fee for late regulatory returns from GBP250 to GBP100 and making minor clarifications to SUP reporting provisions.

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The UK Prudential Regulation Authority (PRA) and the UK Financial Conduct Authority (FCA) have published a joint report on the UK's mutual and cooperative sector, and their commitment to supporting this sector in respect of the regulators' objectives, including the secondary international competitiveness and growth objective. The report follows a request made in November 2024 by the Economic Secretary to the Treasury for a report on the current mutuals landscape before the end of year, as part of the government's commitment to unlock the full potential of this sector in the UK.

The report highlights the regulators' recent work impacting building societies, credit unions, mutual insurers and funeral plan providers. It also notes ongoing reviews and legislative modernisation efforts which support growth in the sector. In particular, the report suggests the government may wish to consider updating the Building Societies Act 1986 and the Credit Unions Act 1979 – commenting that there are other features of credit union legislation that may benefit from being reviewed. Finally, the report also observes that there are many countries with a greater variety of products and services in the mutual sector compared to the UK, and that even though credit unions received powers in 2023 to offer a wider range of products and services including conditional sale, hire purchase and insurance distribution, no credit union has yet applied to the FCA to take advantage of this new benefit.

The Joint Committee of the European Supervisory Authorities (ESAs) has updated its consolidated Q&A on the EU packaged retail and insurance-based investment products (PRIIPs) key information document. The consolidated document combines responses given by the European Commission in relation to interpretation of Union law with responses given by the ESAs in relation to the application or implementation of the PRIIPs legislation. The updated document includes five new Q&As on performance scenario calculations under section VI.

The UK Prudential Regulatory Authority (PRA) has published a policy statement confirming the complete withdrawal of supervisory statement SS20/15 on building societies' treasury and lending activities, without replacement. Following the May consultation, the final policy largely remains unchanged. The PRA concludes that SS20/15 is no longer aligned with its broader policy approach, it creates a potential level-playing field issue by imposing prescriptive expectations on building societies that do not apply to banks, and is unnecessary given the sector's improved risk management sophistication and existing supervisory tools. The policy also makes consequential amendments to SS31/15 (ICAAP and SREP) and clarifies that ongoing risk management expectations for building societies will align with those applicable to banks under other supervisory statements. Following consultation feedback, the PRA brought forward the implementation date of 1 January 2026, with the withdrawal now effective immediately from publication.

The European Banking Authority (EBA) has launched a consultation on draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the revised Capital Requirements Directive (CRD VI) concerning prudentially material transactions. The RTS specify the minimum information to be provided, common assessment methodology, and processes for notifications and prudential assessments of material acquisitions, transfers of assets or liabilities, mergers, and divisions, while the ITS establish common procedures, forms and templates for cooperation between competent authorities. The draft RTS embed proportionality by exempting information already held by authorities, using documents prepared for mergers or divisions under the Company Law Directive, coordinating with related procedures (e.g., authorisation of credit institutions where the merger requires a new licence), and allowing flexibility for divisions given their rarity.

In the absence of a materiality threshold in the CRD, they also introduce some proportionality criteria for notifications and assessments, especially for mergers involving small, non-complex or intra-group institutions, to streamline implementation of the merger. Building on common information requirements and terminology, the RTS clarify complex aspects and supplement Level 1 provisions. The deadline for comments is 5 March 2026, with a virtual public hearing scheduled for 4 February 2026. Final draft RTS and ITS are due for submission to the European Commission by July 2026 (RTS) and January 2027 (ITS).

The Basel Committee on Banking Supervision (BCBS) has launched a consultation on introducing a standard format for machine-readable Pillar 3 disclosures by internationally active banks. Most banks currently publish their disclosures in PDF format only, which makes it difficult to aggregate, process and compare data across banks. The proposal aims to enhance accessibility and comparability of key risk metrics by requiring quantitative disclosures to be published in a standardised machine-readable format, without altering existing disclosure requirements. National supervisors would determine whether banks should publish machine-readable Pillar 3 disclosures on their own websites or via a centralised data repository. The deadline for comments is 5 March 2026.

The European Banking Authority (EBA) has published a follow-up peer review report on the authorisation of payment institutions (PIs) and electronic money institutions (EMIs) under the revised Payment Services Directive (PSD2). The review assessed actions taken by 29 national competent authorities (NCAs) following the 2023 report to address recommendations on authorisation processes, implementation of the EBA guidelines on authorisation, governance, AML/CFT controls, and local substance. While most NCAs improved efficiency through clearer guidance, pre-application engagement, and streamlined procedures, authorisation timelines remain highly divergent, ranging from 4-6 months to 27 months in one member state, with a median of 9.5 months (counting from the date of submission of an application). Delays are attributed to incomplete or low-quality applications and the time applicants take to address deficiencies.

While several supervisors have addressed previously identified deficiencies in the implementation of the EBA guidelines, notably on business plan assessments and AML/CFT controls, some gaps remain and in the assessment of local substance, creating risks of regulatory arbitrage. Therefore, despite notable improvements and a general move towards convergence, further efforts are needed. The EBA calls for further convergence to ensure a level playing field and robust supervisory practices across the EU.

The Bank of England (BoE) has published a statement of policy outlining its framework for reviewing rules applicable to financial market infrastructures (FMIs), including recognised central counterparties (CCPs), central securities depositories (CSDs), overseas CCPs, third country CSDs, critical third parties (CTPs) and recognised clearing houses which are not recognised CCPs.

The framework, introduced under the Financial Services and Markets Act 2023, aims to ensure that rules remain fit for purpose and aligned with the BoE's statutory objectives of financial stability and innovation. The review process involves four steps: monitoring; selection; choice of methods; and execution, with stakeholder engagement and transparency emphasised throughout. Reviews may be triggered by legal requirements, changes in market conditions, unintended consequences or changes in international standards. The deadline for feedback on this policy is 4 September 2026 and the BoE coordinate with other UK regulators and HM Treasury where appropriate.

The European Commission (EC) has published a Communication to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions on further development of capital market integration and supervision within the Union, announcing a set of major legislative reforms. The package seeks to address obstacles to innovation and barriers to integration resulting from divergent rules, duplicative requirements and inconsistent supervision. The EC proposes a suite of amendments to key EU financial services and capital markets legislation in a package described as a central component of the savings and investments union (SIU), specifically a:

• Regulation which will amend: (i) the European Securities and Markets Authority (ESMA) Regulation; (ii) the European Markets Infrastructure Regulation (EMIR); (iii) the Markets in Financial Instruments Regulation (MIFIR); (iv) the Central Securities Depositories Regulation (CSDR); (v) the Distributed Ledger technology Pilot Regulation (DLTPR); (vi) the Markets in cryptoasset Regulation (MiCAR); and (vi) the Cross-Border Distribution of Funds Regulation (CBDR). 

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The Bank of England (BoE) has launched its second system-wide exploratory scenario (SWES) exercise, this time focused on the private markets ecosystem. It will be run in collaboration with a group of banks and NBFIs active in these markets. Its aim is to better understand how banks and non-banks active in private markets would respond to a severe but plausible global downturn, how their actions interact at a system level, and whether these interactions can amplify stress across the financial system and pose risks to UK financial stability and the provision of finance to the UK real economy. The exercise is not a test of the resilience of the individual firms that will participate in the exercise. Its focus is system wide, exploring the resilience of the provision of private market and related public market finance to the UK corporate sector. It will focus on private equity (PE) sponsored UK corporates, credit originated to finance these corporates (including leveraged loans and high-yield bonds) and broader private credit (PC) provided to the UK corporate sector. The SWES will aim to include key participants in the private markets ecosystem. This includes alternative asset managers that manage PE and PC funds; large banks that provide credit to both private market funds and PE-sponsored corporates; and institutional investors that participate in private markets and related public markets. The BoE anticipates having largely completed firm engagement and analysis in 2026, with the final report to be published in early 2027 and interim findings over the course of 2026.

HM Treasury has published a policy update on creating a provisional licences authorisation regime for early-stage financial services firms seeking FCA authorisation. The purpose is to reduce the barriers that financial services firms face when seeking authorisation. The proposed "provisional licences" regime will enable the FCA to grant time-limited permissions (generally up to 18 months) so that firms can get "up and running" in a controlled environment with strong regulatory oversight, whilst working towards full authorisation. The policy update sets out details of how the government intends to deliver this. It discusses the purpose and design of the regime including its scope and eligibility, the duration of provisional licences and other restrictions and requirements on firms during the provisional licence period. It concludes with a discussion of exiting the regime, ideally with full authorisation. This provisional licence regime will require. primary legislation, and the updates reports that the government will take this forward when parliamentary time allows. The FCA will engage with industry on the design of the regime and consult as necessary.

The European Securities Markets Authority (ESMA) has issued a statement on the discretionary transitional regime for cryptoasset service providers (CASPs) that offered their services in accordance with applicable law prior to 30 December 2024, contained in the Markets in Cryptoassets Regulation (MiCAR). Member States may decide not to apply the transitional regime or to reduce its duration. Given the national divergence in transitional periods applicable across the EU member states, ESMA expects CASPs not yet authorised under MiCAR to have implemented orderly wind-down plans for the services they provided in member states in which the transitional period is over and orderly wind-down plans in place ready for implementation ahead of the end of the remaining transitional periods in case they should not be authorised by then.

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The European Commission (EC) has announced that it has listed Russia as a high-risk country with strategic deficiencies in its anti-money laundering and counter-terrorist financing frameworks (AML/CFT) pursuant to the EU's directive on anti-money laundering and terrorist financing (AMLD IV). This follows Delegated Regulation (EU) 2025/1393, adopted in July, which committed the EC to conclude a review of third countries not listed by the Financial Action Task Force (FATF), but whose membership is suspended. This included Russia which, following a technical assessment, the EC concludes meets the criteria to be designated as a high-risk third country. The EC has therefore adopted a delegated regulation adding Russia to its list of high-risk jurisdictions presenting strategic deficiencies in their national AML/CFT regimes. On the following day, 4 December, the EC made a further announcement that it has updated its list of high-risk jurisdictions presenting strategic deficiencies in their national AML/CFT regimes following the decisions taken at the FATF and its list of 'Jurisdictions under Increased Monitoring' ('grey list'), following the plenaries of June and October 2025. The EU has adopted a further delegated regulation under AMLD IV adding new third-country jurisdictions (Bolivia and the British Virgin Islands) to the list of jurisdictions with strategic deficiencies and delisting a number of others (Burkina Faso, Mali, Mozambique, Nigeria, South Africa and Tanzania). The delegated regulations will enter into force after scrutiny and non-objection of the European Parliament and the Council within a period of one month (which can be extended by a further month). EU entities covered by the EU's AML framework are required to apply enhanced vigilance in transactions involving such high-risk jurisdictions.

The UK Financial Conduct Authority (FCA) has published policy statement PS25/19, confirming final rules to modernise complaints reporting. Following its May consultation, the FCA confirms the rules largely as proposed, including: replacing five existing returns with a single consolidated return; removing group-level reporting; updating complaints categorisation to reflect evolving product types; improving guidance on products subject to complaints reporting; and introducing a category to capture complaints by vulnerable consumers. Minor adjustments were made following feedback, such as taxonomy updates. Firms have 12 months from publication (until December 2026) to implement the changes and make the appropriate internal process and system changes. The first reporting period under the new arrangements is set for 1 January to 30 June 2027, with further details set out in Chapter 3 of the policy statement. The FCA will provide further communication and user testing to support a smooth transition and will review effectiveness post-implementation after five years. Separately, Chapter 4 outlines a consultation on whether to extend the capture of vulnerability-related data to payment services, funeral plans and claims management company firms. The deadline for responses is 2 February 2026.

The UK Prudential Regulation Authority (PRA) has published a policy statement and supervisory statement SS4/25, updating expectations for banks and insurers on managing climate-related financial risks. The final policy replaces SS3/19 in its entirety and applies with immediate effect. Following feedback from the April consultation, the PRA makes changes to the final policy (i) clarifying proportionality, allowing firms to tailor governance and risk management based on materiality and business models; (ii) recognising litigation risk as a potential transmission channel; and (iii) confirming that the six-month review period is to conduct an internal gap analysis, not an implementation timeline. Firms may integrate climate responsibilities within existing governance frameworks and embed climate risks into current risk registers or sub-registers, with flexibility in approach. The PRA emphasises a principles-based, proportionate framework aligned with international standards, encouraging scenario analysis, reverse stress testing and engagement with the Climate Financial Risk Forum (CFRF).

The European Banking Authority (EBA) has published a consultation paper on draft amendments to the regulatory technical standards (RTS) under Delegated Regulation (EU) 2017/390, supplementing the Central Securities Depositories Regulation (CSDR) prudential framework. The changes respond to the CSDR Refit (Regulation (EU) 2023/2845), which now permits banking CSDs to provide banking-type ancillary services to participants of other CSDs, including foreign currency cash settlement. This expansion introduces potential credit, liquidity, and concentration risks, prompting the EBA to propose updates to prudential requirements, including enhanced frameworks for intraday credit and liquidity risk management, credit limits and collateral management. The draft RTS also aligns references with amendments made to the Capital Requirements Regulation. The deadline for comments is 3 March 2026.

The UK Financial Conduct Authority (FCA) has published an update on its AI Live Testing service. The service aims to promote the safe and responsible adoption of AI in UK financial services through a collaborative, real-world testing environment. The live testing service is voluntary and open to firms that have developed AI proofs of concept and are active in UK financial markets, subject to competitive selection criteria. The initiative complements the FCA's Supercharged Sandbox and follows its September feedback statement on AI benefits and risks. Applications for the first AI Live Testing cohort closed on 15 September. The application window for the second cohort will open in January 2026, with testing commencing in April 2026.

The UK Financial Conduct Authority (FCA) has published a policy statement on changes to handling rules for motor finance complaints. The FCA consulted on proposed changes in Chapter 11 of CP25/27, and this aspect of the consultation closed on 4 November to allow time to finalise any changes and give firms notice before the current extension in the rules for handling motor finance complaints ended on 4 December. The FCA confirms that it is:

• Excluding leasing complaints from any further extension, meaning that firms need to start sending final responses to them from 5 December.
• Further extending the time firms have to send final responses to all other relevant discretionary commission arrangement (DCA) complaints and non‑DCA commission complaints to 31 May 2026 (two months earlier than consulted on). This is so firms will not have to start sending final responses before the FCA has decided whether the redress scheme will go ahead, and which complaints will be covered if it does, without making consumers wait any longer than necessary for a complaint response if they do not fall within any scheme.
• Requiring firms to update their public facing communications to reflect the changes to the time limits, reverting back to the usual six months that consumers will have to refer a complaint to the Financial Ombudsman Service for final responses sent after 29 January 2026.
• Extending record keeping and retention requirements until 11 April 2031.

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The European Securities and Markets Authority (ESMA) has announced that it will launch a Common Supervisory Action (CSA) with national competent authorities in 2026 to review compliance with MiFID II conflicts of interest requirements in the distribution of financial instruments. The press release confirms the CSA will examine how firms identify, prevent and manage conflicts when offering investment products to retail clients. It will focus on: (i) the possible influence of staff remuneration and inducements on what products are offered to investors; (ii) the role of digital platforms in product selection, and whether this serves the investor's best interests; and (iii) the management of conflicts between firm profitability and the needs of retail investors.

The Property (Digital Assets etc) Bill has received royal assent and entered the statute book as the Property (Digital Assets etc) Act 2025. The Act gives effect to recommendations of the Law Commission confirming in statute that a thing that is digital or electronic in nature can be recognised as personal property even if it does not fall within the traditional categories of 'things in possession' or 'things in action'. This means that certain digital assets such as crypto-tokens or crypto currencies can now be recognised as property providing legal certainty for businesses and individuals. The Act applies to England, Wales and Northern Ireland.

The Bank of England's (BoE) Financial Policy Committee (FPC) has published a Financial Stability in Focus report, revisiting its assessment of bank capital requirements. The FPC now judges that the appropriate benchmark for the system-wide level of Tier 1 capital requirements is around 13% of risk-weighted assets, equivalent to a Common Equity Tier 1 (CET1) ratio of around 11%. This represents a reduction from the 2019 assessment, which set the benchmark at 14%, reflecting improvements in risk measurement, a lower systemic importance of some banks, and a decline in banks' average risk weights.

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The UK Financial Conduct Authority (FCA) has published an update on its forthcoming review of the access to cash regime. The regime, introduced under the Financial Services and Markets Act 2023, seeks to maintain responsible provision of cash access services to consumers and businesses. The FCA expects to begin its review in Q4 2026 and publish findings in Q2 2027. While the exact scope and methodology will be determined closer to the time, the review will assess compliance, costs to firms and the regime's effectiveness in preventing gaps in cash access. It will include quantitative analysis and evaluation of indicators such as consumer sentiment and cash coverage data, alongside stakeholder engagement.

The Single Resolution Board (SRB) has published a list of consultations and industry requests for 2026. The list is presented in four tables covering expected consultations, data requests and deliverables arising from EU legal acts, SRB Expectations for Banks and the ongoing shift towards bank-led testing and resolvability assessments. For clarity, the SRB has explicitly separated data- and content-related requests into two categories: those applicable to all banks earmarked for resolution; and those targeting a subset of banks based on their resolution strategy and risk profile. The tables provide a comprehensive overview of potential requirements for 2026. Banks have been informed through their priority letters which, if any, additional obligations apply to them individually. From 2026, many bank-specific deliverables previously requested annually will only be required in exceptional cases, such as when gaps in resolvability remain or previously submitted information becomes outdated.

The UK Competition and Markets Authority (CMA) has published its final decision following a review of the SME Banking (Behavioural) Undertakings 2002, specifically the limitation on bundling provisions (LOBP). These provisions prohibited bound banks from requiring SMEs to open or maintain a business current account as a condition for obtaining a business loan or deposit account. Following its review, the CMA concluded that, due to significant changes in market conditions since 2002, including increased competition, reduced barriers to entry, technological developments, greater customer willingness to switch providers and the introduction of the consumer duty, the LOBP are no longer appropriate and should be released. The CMA found that banks previously bound by these undertakings no longer hold sufficient market power in SME loans and deposit accounts to justify retaining these restrictions, and that competitive constraints would prevent adverse effects on competition if such tying practices were reintroduced. The LOBP were the last remaining provisions of the SME Banking (Behavioural) Undertakings 2002 meaning that these have now been released in their entirety.

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/34, setting out its proposed regulatory regime for environmental, social and governance (ESG) rating providers. This follows the government's draft legislation to bring this activity within the FCA's perimeter.

The proposed regime combines: (i) existing baseline standards set out in specific sections of the FCA's Handbook, including Threshold Conditions (COND), Principles for Businesses (PRIN), Systems and Controls (SYSC), the Senior Managers and Certification Regime (SM&CR) and General Provisions (GEN); and (ii) tailored requirements, informed by the International Organization of Securities Commissions, to address risks specific to ESG ratings. These tailored rules, set out in Chapters 3 to 6 of the consultation paper, focus on transparency, systems and controls, governance, conflicts of interest and stakeholder engagement.

While rating providers will be regulated, the FCA expects users to continue conducting due diligence to assess ratings' relevance and suitability, noting that the scope of regulation may require distinguishing between regulated and unregulated products. The FCA will monitor whether further guidance for firms on using ESG ratings will be useful.

The deadline for responses is 31 March 2026, with final rules expected in Q4 2026. The authorisation gateway is expected to open in June 2027, and the regime is scheduled to go live on 29 June 2028. In parallel, the FCA published a research note titled "Understanding the UK ESG Ratings Market: Findings from Our Surveys".

The European Securities Markets Authority (ESMA) has issued a statement to support the smooth implementation of the regulation on markets in cryptoassets (MiCAR) data standards and format requirements. The statement provides technical specifications on:

• The format of order book records for cryptoasset service providers (CASPs) operating a trading platform for cryptoassets, as defined by Commission Delegated Regulation (EU) 2025/416.
• Record-keeping obligations for CASPs as defined by Commission Delegated Regulation (EU) 2025/1140, specifying records to be kept of all cryptoasset services, activities, orders and transactions undertaken.
• Presentation of transparency data by CASPs operating a trading platform for cryptoassets, as defined by Commission Delegated Regulation (EU) 2025/417.
• Format and data standards requirements for MiCAR white papers, under Commission Implementing Regulation (EU) 2024/2984.
• Data necessary for the classification of cryptoasset white papers, as defined by Commission Delegated Regulation (EU) 2025/421 and the practical arrangements to ensure that such data is machine-readable.

This public statement aims to provide further practical guidance to market participants in complying with the above requirements.

The UK Prudential Regulation Authority (PRA) has published a letter addressed to credit union directors. It summarises key findings from its 2025 assessment of credit unions with assets up to GBP50 million and sets out supervisory priorities for 2026. The PRA identifies operational resilience as a key risk, with thematic work planned in 2026 to strengthen this area, including contingency planning and ensuring robust arrangements for replacing key staff and directors. The second key risk highlighted is disorderly failure: boards are expected to monitor prudential positions and financial forecasts proactively, act promptly on emerging issues and consider alternatives where activities become unsustainable, to avoid disorderly wind-down. In addition to these priorities, the PRA will maintain a focus on risk management throughout 2026. Governance standards also remain a priority, with emphasis on reducing dependency on key individuals and improving risk oversight. Areas for continued attention include succession planning, policy reviews, business planning and board performance appraisals (noted as a non-exhaustive list). The PRA reminds credit unions of their regulatory obligations, including maintaining open and cooperative engagement under Fundamental Rule 7. The letter should be read alongside the January Dear CEO letter to UK deposit takers, which outlines the PRA's priorities in this sector.

The UK Financial Conduct Authority (FCA) has published policy statement PS25/17 on removing the systematic internaliser regime for bonds, derivatives, structured finance products and emission allowances from 1 December.

Following feedback from its July consultation, the FCA is adopting all proposals as consulted on, except for the second proposed change to the price waiver. That change would have allowed a trading venue to derive the price from the best bid and offer prices on the lit order book where reference price orders are placed, which would allow placing mid-price dark orders below large in scale on lit order books. The FCA remains minded to implement this change after gathering further information to ensure the change does not weaken the information content of post-trade data. The FCA expects to finalise a proposal on post-trade transparency in its forthcoming consultation on equity transparency. Meanwhile, from 20 March 2026, trading venue operators will be permitted to use a broader set of prices from a wider set of venues when crossing orders for equities under the reference price waiver.

The FCA also confirms the repeal of the rule that prevents investment firms from carrying out matched principal trading on their multilateral trading facilities and from operating an organised trading facility in the same entity for which they are a systematic internaliser from 30 March 2026.

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The UK Financial Conduct Authority (FCA) has published findings from a multi-firm review assessing the effectiveness and governance of rating committees at UK-registered credit rating agencies (CRAs). The review focused on four areas: purpose, people, processes, and internal controls, highlighting both good practices and areas for improvement. Most firms had systems supporting compliance with internal policies and the EU Credit Rating Agencies Regulation (as amended by the CRA Regulations (EU Exit) 2019), alongside controls to prevent unauthorised access to information. Most firms also had robust governance frameworks in place with three lines of defence. However, some lacked clear documentation of rating committees, making it difficult to determine variations by asset class or whether any deviations or exceptions were permitted. Good practices on people included collective decision-making, in-house training for committee Chairs and systems for member selection, while improvements were needed in meeting minimum quorum requirements and monitoring conduct and culture risks. 

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The UK Financial Conduct Authority (FCA) has published Handbook Notice 135 outlining amendments to the FCA Handbook resulting from the following statutory instruments:

• Markets in Financial Instruments (Systematic Internalisers Multilateral Trading Facilities and Equity Transparency) Instrument 2025 – now in force – and the Technical Standards (Markets in Financial Instruments Regulation) (Equity Transparency) (Amendment) Instrument 2025, which will enter into force on 30 March 2026. These instruments make changes to repeal the systematic internaliser regime for bonds and derivatives and remove certain obligations and restrictions placed on UK venues by onshored EU legislation.
• Berne Financial Services Agreement Instrument 2025, which enters into force on 1 January 2026, to add a new Handbook guide and update related guidance provisions.
• Dispute Resolution: Complaints Sourcebook (Eligibility of Complainants) Instrument 2025, which entered into force on 28 November, to add new guidance to clarify DISP 2.7.6R(4).
• Compensation Sourcebook (Assignments Under Scots Law) Instrument 2025, which entered into force on 28 November, making changes to ensure the Financial Services Compensation Scheme's electronic assignments comply with Scots law.