Welcome to the latest edition of the Financial Services SpeedRead, a collection of bite-sized updates designed to help you keep on top of key regulatory developments in financial services over the preceding fortnight. Please get in touch if you want to explore any of the topics covered in this fortnight's edition of Financial Services SpeedRead in more detail.
Financial Markets
HMT designates four cloud service providers as critical third parties
On 10 July 2026, HMT published a press release announcing the designation of four global cloud service providers as Critical Third Parties (CTPs) under the Financial Services and Markets Act 2023. The BoE published a corresponding announcement confirming the same designations. The designations are intended to strengthen the operational resilience of the UK financial system by bringing major technology providers under direct regulatory oversight.
The press releases set out the following key points:
- the BoE, PRA and FCA will jointly oversee the CTPs, focusing on the resilience of the critical services they provide to the UK financial sector;
- the four designated CTPs are Microsoft Ireland Operations Limited, Google Cloud EMEA Limited, Amazon Web Services EMEA SARL and Oracle Corporation UK Limited;
- notwithstanding the increased regulatory oversight of the CTPs, financial firms remain responsible for managing risks arising from their third-party suppliers; and
- further providers may be designated over time where this is necessary to protect UK resilience.
The designations will take effect from 13 July 2026.
ESMA publishes briefing on triangular passporting
On 7 July 2026, ESMA published a supervisory briefing on triangular passporting under MiFID II, covering the practice of using a branch or tied agent in one host Member State to provide investment services into another. The briefing sets expectations for firms and National Competent Authorities (NCAs) to support supervisory convergence and investor protection, without creating new legal obligations.
The briefing includes expectations for firms to:
- specify triangular passporting arrangements and the authorised services they intend to provide cross-border in passporting notifications;
- assess and regularly review risks arising from the triangular passporting model, including investor protection, AML/CTF, outsourcing and third-party risks;
- avoid using triangular passporting to circumvent supervisory competences or engage in regulatory "forum shopping"; and
- provide clear, fair and non-misleading information to clients on service delivery, supervision, complaints, redress and compensation arrangements.
The content of the briefing is not binding or subject to any "comply or explain" mechanism. However, NCAs are expected to apply the briefing within a reasonable timeframe.
Banking and Prudential
PRA looks to enhance usability and releasability of capital buffers
On 7 July 2026, the PRA published a statement on enhancing the usability and releasability of capital buffers. The statement clarifies that the PRA could release other systemically important institution buffers in systemic stress, including by setting other systemically important institution (O-SII) buffer rates to zero, to support banks’ use of capital buffers and continued lending to the real economy.
The statement is aimed at reducing incentives for banks to hold excess capital or take defensive actions, such as restricting lending to creditworthy households and businesses in stress periods.
The statement indicates that the PRA may:
- use existing discretionary powers to vary O-SII buffer rates, including setting them to zero, in systemic stress;
- apply an indicative period after releasing the O-SII buffer, during which no increase would be expected;
- assess any return to normal O-SII buffer rates by reference to banks’ ability to rebuild capital while continuing to lend, alongside economic recovery, financial conditions and banks’ capital outlook;
- consult in H2 2026 on changes to the PRA’s O-SII buffer statement of policy and related guidance on rebuild expectations; and
- consider whether greater clarity on use of the PRA buffer outside systemic stress, and further engagement with investors and rating agencies, could support buffer usability.
The PRA intends to consult in H2 2026 on proposed changes to its O-SII buffer statement of policy.
EBA publishes final guidelines on third-country branch authorisation
On 7 July 2026, the EBA published final guidelines on the authorisation of third-country credit institutions to set up third-country branches in Member States, pursuant to Directive (EU) 2024/1619, amending Directive 2013/36/EU (CRD6). The guidelines set out:
- the relevant information to be included in authorisation applications by the applicant head undertaking;
- the procedure for authorisation, as well as the standard EBA forms and templates for the provision of information referred to above;
- the conditions for national competent authorities in granting authorisation; and
- under which circumstances previous authorisation applications may be relied on.
The deadline for national competent authorities to report whether they will comply will be two months after publication of the official translations. The guidelines themselves will apply from 11 January 2027.
HMT sets out Overseas Prudential Requirements Regime
On 1 July 2026, HMT published a draft of the Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 (OPRR). The instrument restates, with modifications, existing UK Capital Requirements Regulation (CRR) equivalence regimes as a single Overseas Prudential Requirements Regime, preserving the overall scope and effect of existing equivalence decisions while moving the framework into the FSMA model of regulation.
The reforms are part of the UK’s wider programme to replace assimilated EU financial services law with a framework tailored to the UK’s needs. HMT says the instrument should make the bank capital regime easier to navigate and is not expected to impose material ongoing direct costs on firms.
The draft includes proposals to:
- restate existing UK CRR equivalence regimes as one OPRR and preserve existing equivalence decisions as designations;
- move recognition of overseas jurisdictions to an outcomes-based approach focused on financial stability, safety and soundness, competition, and UK competitiveness;
- adjust the treatment of exposures to overseas exchanges so capital treatment better reflects underlying risk;
- replace the "third-country investment firm" definition with a new "overseas investment firm" definition; and
- extend the regime to allow for preferential treatment of overseas covered bonds from jurisdictions with similar levels of protection as UK covered bonds.
The OPRR will come into force on 1 January 2027.
Fund Management
No recent updates
Senior Managers and Governance
No recent updates
Financial Crime
FCA reports first-year action on illegal promotions and market abuse
On 9 July 2026, the FCA published a press release highlighting actions during the first year of its 5-year strategy on illegal finfluencer promotions, market abuse, scam firms and consumer protection; this release forms part of its annual report and accounts for 2025/26.
The FCA says it has focused on the most serious risks and harms, delivering an estimated £5.6 billion in benefits to consumers, firms and the wider economy. It also highlights that greater use of data, technology and automation to detect harm earlier, makes supervision more efficient and reduces unnecessary regulatory burden on firms.
The FCA identifies the following key themes:
- tackling financial crime and market abuse, including a finfluencer "week of action" involving nine international regulators, three arrests and 650 social media takedown requests;
- pursuing scams and serious misconduct, including 2,329 warnings about unauthorised or potentially scam firms in 2025 and 17 criminal convictions for offences including fraud, insider dealing, money laundering and DPA offences;
- strengthening consumer outcomes, including through Firm Checker, retail financial services reforms and final rules for Buy Now Pay Later products ahead of the July 2026 regime;
- supporting innovation and competitiveness, including pro-growth measures, 132 applications to the AI Supercharged Regulatory Sandbox and the PRA scale-up unit; and
- simplifying regulatory engagement, including streamlined firm reporting, a single digital entry point and fewer sector portfolio letters.
Firms should monitor the FCA’s annual outcomes materials and Annual Public Meeting on 6 October 2026, for further signals on its supervisory priorities, particularly in relation to financial crime, consumer protection, innovation and data-led supervision.
AMLA publishes advisory note on AML risks arising from the end of the MiCAR transitional period
On 29 June 2026, the Anti-Money Laundering Authority (AMLA) published an advisory note on money laundering and terrorist financing risks resulting from the end of the Markets in Crypto-Assets Regulation (MiCAR) transitional period on 1 July 2026. Firms must now be authorised as MiCAR-compliant crypto-asset service providers (CASPs) to continue providing crypto-asset services in the EU.
The advisory note's mitigating measures identify that:
- unauthorised virtual asset service providers (VASPs) face risks of weakened AML/CFT controls and illicit flow concealment during wind-down, and should maintain adequate governance, resources and enhanced monitoring until all regulated activities have ceased;
- authorised CASPs onboarding customers from exiting VASPs should ensure scalability of transaction monitoring systems and apply effective customer due diligence, avoiding blanket de-risking; and
- Financial Intelligence Units should ensure effective cross-border co-operation to maintain visibility of flows linked to exiting VASPs and receiving CASPs.
From 1 July 2026, only MiCAR-authorised CASPs may provide crypto-asset services in the EU, and AMLA expects all relevant parties to implement the identified mitigating measures.
Retail Services
FCA publishes review on products and services good practice and areas for improvement
On 10 July 2026, the FCA published findings from its review into firms' approaches to the products and services outcome under the Consumer Duty. The review focused on product design, target markets, monitoring and review, and distribution.
The report sets out that:
- firms demonstrating good practice mapped customer needs to product design using detailed customer profiles and negative target markets;
- many firms enhanced management information to monitor customer outcomes, including product usage trends and early cancellation data;
- some firms provided insufficiently granular target market definitions that did not account for the risk profile of the product or service; and
- several firms failed to validate whether changes to products, services or distribution strategies improved customer outcomes.
Firms should also consider the FCA's concurrent consultation (CP26/23) on the scope and proportionality of the duty before making major process changes.
The FCA states it will continue to provide firms with examples of good practice and areas for improvement to support compliance with the Duty.
ESMA reminds firms of binary options restriction for prediction markets
On 3 July 2026, ESMA published a statement reminding firms to assess whether newly offered products fall within existing product intervention measures on binary options. The statement responds to the growing popularity of prediction markets, or event contracts, and increasing global retail participation.
ESMA explains that event contracts have a binary financial outcome and may qualify as financial instruments depending on the relevant event question. Where they are financial instruments, ESMA says they classify as derivatives and fall within national product intervention measures prohibiting the marketing, distribution or sale of binary options to retail clients. ESMA expects firms to assess whether newly offered event contracts fall within binary option product intervention measures.
Firms should ensure appropriate investment firm authorisation where event contracts qualifying as financial instruments are distributed in the EU to non-retail clients.
ESMA also reminds firms that event contracts may qualify as bets under national gambling legislation.
FCA publishes multi-firm review on value of legacy pension products
On 2 July 2026, the FCA published the findings of a multi-firm review of Consumer Duty price and value practices in unit-linked non-workplace pensions and savings. The FCA found that customers in legacy products, now closed to new savers, may be receiving poorer value than those in newer products. Please refer to our previous publication on the "price and value" outcome.
Key good practices identified by the review include:
- providers simplifying or rationalising legacy products and funds, or having plans to do so;
- there is evidence of firms capping or reducing charges for customers in legacy products; and
- firms are comparing outcomes across different customer groups and moving customers to better-value alternatives.
The FCA also noted that despite the good practices identified, complex charging structures, older product design and weakness in firms' data meant some pension savers are receiving poorer value.
The FCA is calling on all pension providers to consider the report and adopt the good practices identified, and is engaging with firms on barriers to improving value for customers in closed books. While the multi-firm review relates to pension products, the good practices are indicative of Consumer Duty expectations more generally.
FCA publishes statement on partial suspension of the motor finance compensation scheme
On 2 July 2026, the FCA published a statement confirming that the Upper Tribunal has partially suspended the motor finance compensation scheme following legal challenges brought by four commercial parties.
The partial suspension means that firms are not required to calculate or pay redress, or send communications about compensation owed under the scheme until the Upper Tribunal process has concluded. Firms should continue to comply with all rules that are not suspended.
The Upper Tribunal is expected to hear the legal challenges to the scheme in December 2026 or February 2027, with the final dates being subject to whether further expert opinions are obtained or disclosures are provided. The FCA has confirmed that it will continue to keep the firm webpage updated with the latest information.
FCA consults on simplifying investment cost disclosures
On 2 July 2026, the FCA published a consultation paper (CP26/24) and a related press release on simplifying consumer investment disclosures. The consultation proposes simplified rules for how platforms, advisers and wealth managers communicate the total costs of investing to clients, including product, distribution and advice costs, to help investors receive clearer and more useful information.
The proposals build on the Consumer Composite Investments (CCI) regime, which will replace Packaged Retail and Insurance-Based Investment Products and Undertakings for Collective Investment in Transferable Securities disclosure documents from June 2027. It is designed to make investment information clearer and more accessible.
The consultation proposes to:
- present distributors’ own costs alongside product costs in a way consistent with the CCI format;
- require regular accounting for the total cost of investing;
- cover disclosures where firms charge fees or pay interest on client cash; and
- give firms more flexibility to communicate investment information in plain English and more engaging ways.
The consultation closes on 21 August 2026. From June 2027, investment firms will be required to provide genuinely plain English information under the new product information regime, so firms should monitor the FCA’s work to embed the CCI rules and related Consumer Duty expectations.
ESMA sets out report-once model for EU transaction reporting
On 2 July 2026, ESMA published its final report on simplifying financial transaction reporting. The report sets out a path towards a "report once" model across Markets in Financial Instruments Regulation (Regulation (EU) No 600/2014) (MiFIR), European Market Infrastructure Regulation (Regulation (EU) No 648/2012) (EMIR) and Securities Financing Transactions Regulation (Regulation (EU) 2015/2365) (SFTR), with potential annual net savings of €250 million to €1 billion for market participants.
Building on ESMA’s earlier call for evidence on a comprehensive approach to simplifying transaction reporting, covered in our previous FSS, the report identifies fragmented and duplicative reporting requirements as key drivers of cost and complexity. ESMA proposes a staged approach, combining immediate burden-reduction measures with longer-term legislative reform.
The report proposes to:
- develop a single integrated reporting framework across MiFIR, EMIR and SFTR;
- allow transaction data to be reported once through a common modular structure and subsequently be reused by authorities;
- expand delegated reporting arrangements, streamline intragroup exemptions and remove low-value duplicative requirements; and
- pursue targeted legislative changes and phased implementation with industry input.
ESMA will now engage with EU institutions on its recommendations. Firms should monitor follow-on EU legislative and technical work on reporting templates, data standards and reporting infrastructure.
EBA publishes final report on product governance requirements for retail banking products with ESG features
On 30 June 2026, the EBA published revised guidelines on product oversight and governance requirements for retail banking products with ESG features and greenwashing risks.
The changes are intended to support robust design and distribution standards for ESG-related retail banking products, reducing the risk that consumers are misled or sold products that do not meet their needs. The guidelines apply to manufacturers and distributors of products within the EBA’s remit, including mortgages, personal loans, deposits, payment accounts, payment services and electronic money.
The guidelines make ESG and greenwashing considerations more explicit across the product lifecycle:
- strengthening manufacturers’ internal control arrangements;
- clarifying expectations for identifying target markets;
- addressing distribution channels and information provided to distributors; and
- updating related provisions to align with the current regulatory framework.
The EBA guidelines will apply from 11 January 2027. Firms in scope should monitor implementation of the revised expectations for ESG-related retail products and associated greenwashing risk controls.
FCA consults on Consumer Duty scope and proportionality
On 29 June 2026, the FCA published a consultation paper (CP26/23) proposing a targeted package of changes to the scope and proportionality of the Consumer Duty. The FCA has identified evidence that the Duty is being applied more widely and intensively than intended, particularly in wholesale markets and complex distribution chains.
The consultation paper proposes to:
- remove business with non-UK customers from the Duty's scope where there is no clear UK connection or reasonable expectation of UK protection;
- clarify the Duty's boundaries so firms can focus on their business rather than demonstrating that the Duty does not apply; and
- provide greater clarity on firms' responsibilities when working together in distribution chains and designing complex products.
The consultation closes on 18 September 2026. The FCA expects to publish a policy statement and make any new rules in Q1 2027.
Digital Finance and Fintech
FCA publishes document on FSMA authorisation applications for cryptoasset firms
On 8 July 2026, the FCA published an information document on the authorisation application form for cryptoasset firms seeking to undertake new cryptoasset regulated activities under FSMA. The document explains the information applicant firms will need to include and is intended to help firms prepare for the application process.
Applications will include both general firm information and cryptoasset-specific information tailored to the applicant’s business model and requested regulated activities. The information document indicates that applicant firms should be prepared to:
- identify the cryptoasset permissions they need, including for dealing, safeguarding, stablecoin issuance, staking and operating a cryptoasset trading platform;
- provide core application material including a regulatory business plan, financial forecasts, IT self-assessment, compliance monitoring plan, complaints policy, financial crime prevention framework and cryptoasset records management policy;
- submit activity-specific information for, as applicable: stablecoin issuance, safeguarding, staking, lending and borrowing, intermediary services and cryptoasset trading platforms; and
- demonstrate controls relating to financial crime, retail client understanding, safeguarding, third-party custodians, conflicts of interest, market abuse and transparency.
The application form is still being finalised, although the FCA does not expect the structure and content of the form to change materially. The form will be available through the FCA’s online system from 30 September 2026, when the gateway opens and the application period starts. Firms are encouraged to monitor the final form and prepare authorisation or variation of permission materials accordingly.
ESMA launches CSA on CASPs' custody-related digital operational resilience
On 8 July 2026, ESMA published a press release launching a Common Supervisory Action (CSA) focusing on the digital operational resilience of crypto-asset service providers (CASPs), with a specific emphasis on custody services – which are seen by ESMA as key areas of risk.
From the second half of 2026 to the first half of 2027, the CSA will:
- assess the maturity of CASPs’ digital operational resilience frameworks in relation to custody activities;
- focus on distributed ledger technology (DLT) related risks, including governance arrangements, key and storage management, transaction controls, incident detection and response, smart contract risks, and third-party dependencies; and
- involve National Competent Authorities (NCA) in carrying out the exercise on a risk-based sample of authorised CASPs.
The findings collected from NCAs will be consolidated into a final report for submission to ESMA’s Board of Supervisors following conclusion of the exercise in the second half of 2027.
FCA publishes press release encouraging banks to improve access to basic bank accounts
On 7 July 2026, the FCA published a press release on its aim of improving access to basic bank accounts. The FCA identified, through a “mystery shopping exercise” covering 298 interactions across branches and telephone, that a third of experiences with basic bank accounts have been rated as poor or very poor, and that bank account providers were not consistently offering these accounts to customers who could benefit from them.
The FCA has collaborated with UK Finance to secure a collective commitment from nine major UK banks and building societies to address poor practice, including:
- providing customers with the right account the first time, with clear communication and minimal friction;
- ensuring a straightforward process for customers without standard ID or a fixed address to open an account;
- spotting vulnerability early and offering accessible alternatives to online-only journeys; and
- implementing individual improvement plans, with the FCA monitoring whether change happens.
FCA publishes Enforcement Watch on Consumer Duty supervision and enforcement
On 7 July 2026, the FCA published the second edition of Enforcement Watch with a focus on its recent approach to supervising and enforcing the Consumer Duty. The newsletter explains how the FCA is using assertive supervision, skilled person reviews and enforcement powers to improve consumer outcomes, signalling that Consumer Duty compliance is now an active enforcement priority.
The FCA says it now has 11 investigations examining potential Consumer Duty breaches and has commissioned around 30 skilled person reviews referencing the Duty since it was introduced. It also notes that it intervened 382 times in the last financial year, illustrating how Consumer Duty concerns may lead to supervisory intervention before, or instead of, formal enforcement action.
The FCA expects firms to:
- put customer outcomes and customers’ interests at the heart of their activities;
- evidence that products and services deliver fair value and meet customer needs;
- ensure product features, benefits and exclusions are clear before, during and after sale;
- provide effective customer support when things go wrong; and
- identify and prevent foreseeable harm, including for customers with vulnerable characteristics.
Firms should monitor FCA supervisory publications and enforcement outcomes for further indicators of how the Duty is being applied in practice.
FCA publishes the Mills Review on AI and the future of retail financial services
On 6 July 2026, the FCA published The Mills Review, a review of how AI could reshape retail financial services for consumers, firms, markets and regulators by 2030 and beyond. The review identifies four major AI-driven shifts likely to affect retail financial services: AI becoming core to firms, transforming consumer journeys, reshaping competition, and amplifying fraud risks.
The key findings of the report include:
- retail financial services are moving from human-led, towards AI-enabled, continuous and delegated services;
- AI could reshape the sector by 2030 – transforming how firms operate, consumers make decisions, markets compete and risks materialise;
- AI could improve outcomes and support growth by reducing friction and tackling long-standing challenges, such as advice gaps, low switching and protection gaps (but it could also increase the risks associated with fraud, cyber security and consumer harm); and
- consumer adoption will depend on trust, control and access – however, one in five UK adults are already open to AI making decisions for them.
Firms should monitor whether, and how, the FCA takes forward the Mills Review's recommendations - including the proposed regulatory perimeter review, monitoring of the transition to autonomous models, and development of an AI-enabled (“agentic”) supervisory model - as well as any future FCA publications offering clarity on good and poor practice in AI-enabled customer support.
FCA publishes guidance on change in control regime for cryptoasset firms
On 30 June 2026, the FCA published an updated "Change in control: cryptoasset firms" webpage to provide guidance on the changes to the thresholds and assessment criteria used to determine "beneficial owners" in the controller chain introduced by the Money Laundering and Terrorist Financing (Amendment) Regulations 2026. The amendments, which went live on the same date, align the regime with the financial services regulatory regime under the FSMA 2000 (Cryptoassets) Regulations 2026. The webpage confirms that where there will be a "beneficial owner" the FCA will assess suitability based on the "Fit and Proper" test under regulation 58A of the Money Laundering Regulations, whereas the assessment criteria in Part XII FSMA will be used where there is no beneficial owner.
The FCA reminds firms planning to submit a change in control application that they can request a pre-application meeting using the FCA's pre-application support service, and encourages beneficial owners to provide financial information on a voluntary basis.
FCA publishes policy statements on the UK cryptoasset regulatory regime
On 30 June 2026, the FCA published five policy statements setting out final rules and guidance for the comprehensive UK cryptoasset regulatory regime. The regime follows the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, passed by Parliament on 4 February 2026, which brought a broad range of cryptoasset activities within the FCA's regulatory perimeter for the first time. The policy statements followed extensive consultation across four discussion papers and 10 consultation papers since 2023.
The policy statements cover the following:
- Admissions and Disclosures (A&D) and Market Abuse Regime for Cryptoassets (MARC) (PS26/9);
- Stablecoin issuance (PS26/10);
- Regulated cryptoasset activities (PS26/11);
- A Prudential regime for cryptoasset firms (PS26/12); and
- Application of the FCA Handbook for Regulated Cryptoasset Activities (PS26/13).
Key changes resulting from the policy papers cover:
- Stablecoin issuance: the FCA has retained the core framework from consultation while enhancing proportionality and clarity through changes such as simplifying backing asset composition requirements, confirming statutory trust arrangements, adjusting redemption timelines, permitting limited intragroup custody, clarifying secondary market redemption requirements, and strengthening holder disclosure and withdrawal-rights obligations;
- Regulated cryptoasset activities: the FCA is finalising its UK cryptoasset regime by easing certain requirements (e.g., removing principal dealers from pre-trade transparency requirements, clarifying best execution as principles-based, permitting staking of retail collateral, raising the settlement float limit to 2%, and allowing broader auto-staking consent) while preserving core retail protections, deferring CASS 17 application to relevant specified investment cryptoasset custody, and adopting a case-by-case, consultation-based approach to decentralised finance oversight based on identifiable controlling entities;
- A&D and MARC: the FCA has largely preserved the CP25/41 framework while making targeted refinements to A&D (in relation to due diligence, admission criteria, disclosure triggers, token identifiers, withdrawal rights and removal of the qualifying cryptoasset disclosure document fungibility exemption) and MARC (narrowing on-chain monitoring requirements and clarifying inside information, intermediary notification provisions and market practice requirements) to enhance proportionality, clarity and operability; and
- Prudential: the FCA has reduced the K-SII coefficient for stablecoin issuance from 2% to 1%, replaced the proposed two-tier classification of qualifying cryptoassets for capital purposes with a simplified model, and removed the requirement to publicly disclose the own funds threshold requirement and the liquid asset threshold requirement while introducing a proportionality framework based on own funds requirements for the public disclosure of prudential information.
All firms carrying out regulated cryptoasset activities must obtain FCA authorisation. The authorisation gateway opens on 30 September 2026 and closes on 28 February 2027. The new regime comes into force on 25 October 2027.
Payments
No recent updates
ESG
No recent updates
Other
No recent updates
