HMT remit and recommendations for the FPC for 2026

HM Treasury has published a letter from John Healy, chancellor of the exchequer, to Andrew Bailey, Bank of England governor, setting out the updated remit and recommendations for the Financial Policy Committee (FPC) for 2026. Mr Healy welcomes the FPC's conclusions to date from its review of bank capital requirements, including proposed reforms to the leverage framework (which the FPC confirmed will go ahead) and the usability and releasability of capital buffers. He looks forward to the FPC delivering these reforms as quickly as possible and expects the next stage of the review to deliver further proposals, particularly to address overlaps identified in capital requirements relating to domestic exposures.

Mr Healy also welcomes the FPC's decision to give firms flexibility to provide more high loan-to-income (LTI) mortgages, and states that the FPC should target improving access to home ownership without prejudicing financial stability, including by considering how the LTI framework can better support this.

Other key recommendations cover strengthening resilience in the non-bank financial sector and core sterling markets, assessing global and geopolitical risks, monitoring cyber and operational risks, including those arising from AI and critical third parties, and continuing to consider climate-related financial risks.

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