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
1. EU Commission publishes delegated regulation on order execution policy criteria for investment firms
On 23 July 2026, the EU Commission published Delegated Regulation (EU) 2026/825 specifying regulatory technical standards on the criteria for establishing and assessing the effectiveness of order execution policies of investment firms. The regulation follows amendments introduced by MiFID Amending Directive ((EU) 2024/790), which deleted obligations for execution venues to publish execution quality data and changed the content and format of information to be published by investment firms.
Under the new standards, investment firms must maintain internal governance procedures for selecting execution venues, including maintaining a detailed internal list of selected venues. Firms must monitor the effectiveness of their order execution policy and assess it at least annually, correcting any deficiencies within a reasonable period.
The regulation enters into force on 12 August 2026 and will apply from 12 February 2028.
2. ESMA publishes follow-up report on cross-border investment services supervision
On 20 July 2026, ESMA published a follow-up report to its 2022 peer review on the supervision of cross-border activities of investment firms. The report assesses progress made by six national competent authorities (NCAs) (AFM in the Netherlands, BaFin in Germany, CNB in the Czech Republic, CSSF in Luxembourg, CySEC in Cyprus and MFSA in Malta) in implementing the original peer review recommendations.
The report identified that the 2022 peer review had driven improvements across the supervisory cycle, including authorisation controls, data-driven and risk-based supervision and enhanced cooperation and enforcement. ESMA continued to encourage all NCAs, particularly those with significant or growing outbound cross-border volumes, to ensure supervisory and enforcement approaches remain proportionate to the scale and complexity of these activities.
3. ESMA publishes statement on T+1 settlement preparations
On 20 July 2026, ESMA published a statement on preparations for the EU's transition to a T+1 settlement cycle, due to take effect on 11 October 2027. The statement follows readiness surveys by the EU T+1 Industry Committee, which showed increasing awareness but uneven implementation levels across EU markets, sectors and firms. ESMA sets out the following key points:
- market participants must comply with a first deadline of 7 December 2026 for requirements relating to allocations and confirmations, including timing and the default use of international communication standards;
- the final deadline is 11 October 2027, covering requirements to optimise the settlement layer, including early instruction submission and the generalisation of CSD functionalities such as auto-partial settlement; and
- insufficient preparedness could trigger significant operational and reputational risks, including inability to meet client demands and higher costs from last-minute remediation.
ESMA and national competent authorities are currently finalising Level 3 guidance on allocations and confirmations.
4. HMT publishes progress report on Financial Services Growth and Competitiveness Strategy
On 14 July 2026, HMT published a progress report entitled "One Year On: Delivering the Financial Services Growth and Competitiveness Strategy" (FS Strategy), setting out achievements in the first year since launch. The FS Strategy, published in July 2025, established a ten-year plan for the UK to be the world's centre of choice for financial services investment by 2035. Key developments highlighted in the report include:
- the introduction of a Financial Services and Markets Bill, estimated to deliver £1.6 billion in net benefits over 10 years, including reforms to the Senior Managers & Certification Regime and the consolidation of the Payment Systems Regulator into the FCA;
- ring-fencing reforms introducing a 'New Growth Allowance' that could unlock up to £80 billion of new financing for UK businesses;
- the publication of final FCA rules for cryptoassets, with the new regime coming into force on 25 October 2027; and
- proposed changes to the Consumer Duty's scope and application for wholesale business.
The Government has committed to reporting annually on further progress delivering the FS Strategy.
Banking and Prudential
5. EBA consults on implementing technical standards under the revised Deposit Guarantee Schemes Directive
On 23 July 2026, the EBA launched four public consultations on proposed rules to strengthen depositor protection and harmonise standards across the EU under the revised Deposit Guarantee Schemes Directive (DGSD3).
DGSD3, adopted in 2026, strengthens the EU framework for managing bank crises by incorporating over 100 operational amendments. The four consultations seek feedback on the first batch of technical standards and guidelines mandated under DGSD3, covering depositor information, information exchange, treatment of client funds and investment of available financial means, and will run until 23 October 2026.
A public hearing, covering all four regulatory products, is scheduled to take place on 24 September 2026.
6. EBA publishes final draft technical standards on material acquisitions, material transfers, mergers and divisions under the Capital Requirements Directive
On 17 July 2026, the EBA published its Final Report on the draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) on the process and procedures for material acquisitions, material transfers, mergers and divisions under the Capital Requirements Directive. The standards implement new supervisory tools introduced by Directive (EU) 2024/1619, and aim to support banking consolidation and deepen EU market integration by clarifying supervisory expectations, reducing regulatory uncertainty, and promoting a consistent prudential assessment framework across the EU.
The draft RTS set out streamlined information requirements for notifications, with exemptions for information already held by competent authorities and leveraging of documentation prepared under the Company Law Directive. The draft ITS establish processes and timelines to facilitate the effective cooperation among supervisory authorities.
Both draft standards will be submitted to the EU Commission for endorsement, following which the RTS will be scrutinised by the European Parliament and the Council before publication in the Official Journal of the EU.
7. EBA publishes final report on amending guidelines on the definition of default
On 16 July 2026, the EBA published its final report on amending the guidelines on the application of the definition of default under Article 178 of Regulation (EU) No 575/2013 (the Capital Requirements Regulation (CRR)). Under the CRR mandate, the EBA reviewed the guidelines with particular focus on encouraging institutions to engage in proactive and meaningful debt restructuring. The final report sets out the following key points:
- the EBA maintains that the 1% threshold applied to reductions in net present value loss in debt restructuring remains appropriate for prudential default recognition;
- the guidelines increase the exceptional treatment of days past due at invoice level from 30 to 90 for factoring arrangements; and
- no changes are introduced to exit criteria for defaulted exposures.
The guidelines apply from 19 October 2026. Competent authorities must notify the EBA of their compliance by 17 September 2026.
8. HMT consults on ring-fencing reform
On 14 July 2026, HMT published a consultation on changes to the ring-fencing regime. The consultation follows the Government's ring-fencing review published on 18 May 2026 (see our previous SpeedRead here), which set out a reform package to be delivered through the Financial Services and Markets Bill, secondary legislation and the PRA rulebook. The PRA has published a parallel consultation on related rulebook changes.
The key proposals in the consultation include:
- introducing a New Growth Allowance permitting ring-fenced bodies (RFBs) to undertake otherwise prohibited activities up to 10% of Pillar 1 credit-risk risk-weighted assets;
- expanding permitted derivatives in line with Basel 3.1, including removing existing tenor restrictions;
- permitting RFB exposures to UCITS funds, SME structured finance vehicles and infrastructure special purpose vehicles;
- enabling RFB defined benefit pension scheme surplus to be transferred to defined contribution schemes within the wider banking group; and
- requiring RFBs using the allowance to disclose how it supports the UK economy.
The consultation closes on 8 September 2026 and HMT intends to lay the final Statutory Instrument in 2027.
Fund Management
No recent updates.
Senior Managers and Governance
No recent updates.
Financial Crime
9. FCA publishes findings on asset management and alternative firms' financial crime controls
On 22 July 2026, the FCA published its findings from a review of financial crime controls across 242 asset management and alternatives firms, highlighting examples of good and poor practice. The review assessed firms' understanding of inherent financial crime risks and the adequacy of their control frameworks. Key findings from the review include:
- just over a fifth of firms had not undertaken a business-wide risk assessment or had one that was incomplete;
- around 40% of firms outsource some part of their financial crime compliance function, yet only 36% of those had full oversight of third-party onboarding processes;
- over a quarter of firms had no formal transaction monitoring process; and
- half of firms reported no investment in AML systems and controls in the preceding 24 months.
The FCA will continue to monitor firms through its supervisory work and intervene where firms fall short.
Retail Services
10. CMA publishes updated guidance on unfair contract terms under the Consumer Rights Act
On 22 July 2026, the Competition and Markets Authority (CMA) published updated guidance on the unfair contract terms provisions in Part 2 of the Consumer Rights Act 2015. The guidance replaces the CMA's previous version and has been revised to reduce length, improve navigability and reflect changes introduced by the Digital Markets, Competition and Consumers Act 2024 (DMCCA).
Key changes reflected in the updated guidance include:
- the CMA's new direct enforcement powers under the DMCCA, enabling it to investigate, determine and impose penalties without court proceedings;
- updated references to unfair commercial practices provisions, which cover anything a trader does that could in some way affect consumers and the decisions they take, now contained in Chapter 1 of Part 4 of the DMCCA; and
- new provisions on mandatory cooling-off periods both when a subscription contract is entered into and on any subsequent renewal, contained in Chapter 2 of Part 4 of the DMCCA (although the guidance notes that these provisions are not yet in force at time of publication).
The CMA states it will have regard to the guidance when exercising its direct enforcement powers.
11. FCA updates good and poor practice guidance on Consumer Duty outcomes
On 10 July 2026, the FCA updated three of its Consumer Duty good and poor practice publications, covering the price and value outcome, the consumer support outcome, and complaints and root cause analysis.
The updates intend to clarify existing expectations with further examples of good and poor practice, reflecting insights from recent supervisory work across multiple sectors, including insights on how smaller firms can meet the FCA's requirements. Some key practical points below:
Price and value outcome:
- Fair value assessments should reflect how firms make decisions in practice and should not be treated primarily as a retrospective exercise;
- where firms apply differential pricing, they must demonstrate that each customer group receives fair value and must not rely on customer inertia or behavioural biases; and
- where assessments identify a risk of poor value, firms must take prompt and effective action, including defined timelines and appropriate monitoring.
Consumer support outcome:
- Post-sale support should be as accessible and effective as pre-sale support, including where services are provided by third parties;
- firms should embed a culture aligned with the Consumer Duty, supported by appropriate training, performance management and governance measures; and
- firms should monitor a broad range of customer support metrics, rather than relying on transactional measures or reactive complaint monitoring.
Complaints and root cause analysis:
- Root cause analysis should lead to clear action plans with designated owners, deadlines and remediation actions, rather than being treated as an end in itself;
- firms should measure the impact of changes made following root cause analysis to assess whether actions have improved customer outcomes; and
- governance structures should ensure substantive challenge and scrutiny of complaints data, with clear escalation routes and accountability.
Firms should review their approaches to fair value, customer support and complaints handling against the updated guidance to ensure they meet the FCA's expectations.
Digital Finance and Fintech
12. HMT publishes recommendations of the Transatlantic Taskforce for Markets of the Future
On 14 July 2026, HMT published the recommendations of the Transatlantic Taskforce for Markets of the Future (TTMF), alongside a joint UK-US statement on stablecoins. The TTMF was established in September 2025 to advance UK-US collaboration on digital assets and capital markets. The recommendations set out the following key points:
- UK and US authorities, including the BoE, FCA and Securities and Exchange Commission (SEC), will seek common approaches to the regulatory treatment of tokenised assets, covering settlement finality and the use of stablecoins as margin collateral;
- the joint statement affirms that stablecoins held out as money should be fully backed by high-quality, liquid assets, with both governments exploring pathways for cross-border activity;
- FCA and SEC staff will explore options to facilitate cross-border capital raising;
- the UK and US will support a targeted review of Basel Committee standards on the prudential treatment of cryptoassets; and
- a private sector-led group will be engaged to test cross-border use cases for tokenised assets.
HMT and the US Treasury will continue to engage with the private sector on these issues.
13. BoE publishes explainer on tokenisation of financial assets
On 14 July 2026, the BoE published an explainer entitled "What is tokenisation?", setting out how tokenisation could improve the way financial assets are recorded and transferred.
In the document, the BoE distinguishes tokenisation from cryptoassets, explaining that tokenisation creates digital versions of existing assets on a secure, shared ledger rather than creating new unbacked assets. This could provide a number of benefits, including speeding up transactions, allowing assets to be divided into smaller pieces and lowering costs by increasing competition.
The BoE states that its ongoing priorities include setting rules for new forms of digital money, improving interoperability between traditional and tokenised systems, and testing ideas on a small scale before wider adoption.
14. Wholesale Digital Markets Champion publishes first report on tokenisation of UK wholesale markets
On 13 July 2026, the Wholesale Digital Markets Champion published his first report to the Chancellor on the future of UK wholesale financial markets. The report sets out a framework for how the UK should develop a tokenised wholesale markets ecosystem, and was developed with the sector in support of the Government's Wholesale Financial Markets Digital Strategy, published as part of the Leeds Reforms in July 2025. Key points include:
- tokenised real-world assets could reach $88 trillion globally by 2035, with an estimated increase of up to £33 billion in annual UK economic output;
- ten priorities are identified, including a pilot issuance of the Digital Gilt Instrument no later than Q1 2027;
- a cross-industry Taskforce with nine Action Groups will drive delivery, beginning with an end-to-end repo use case; and
- co-ordinated action is recommended on legal certainty, interoperability standards and technology-neutral tax treatment.
Views on the report are invited by 4 September 2026, with a second report due by July 2027.
Payments
15. Moorwand Ltd v Gareth Anthony Hamblin & Ors: Court of Appeal allows electronic money institution's appeal in Quincecare duty claim
On 21 July 2026, the Court of Appeal handed down its judgment in Moorwand Ltd v Gareth Anthony Hamblin & Ors [2026] EWCA Civ 942, allowing the appeal of Moorwand Ltd, an FCA-regulated electronic money institution, against a finding that it had breached its Quincecare duty in connection with an authorised push payment fraud.
The Hamblins were victims of an APP fraud, paying £160,000 into accounts held by a fraudulently incorporated company (RND) with Moorwand. The Hamblins brought a derivative claim on RND's behalf, alleging Moorwand should have been put on enquiry that payment instructions were given without RND's authority. The High Court had overturned the trial judge's dismissal, finding errors in his approach and concluding Moorwand was put on enquiry, ordering re-credit of £160,000 to RND's account.
The Court of Appeal held that the trial judge did not make the errors of law identified by the High Court judge. In particular, the trial judge had not wrongly equated the fraudster with RND when assessing the Quincecare duty, but was properly addressing how matters appeared to Moorwand. Nor had the trial judge impermissibly treated facts giving rise to regulatory failings as irrelevant to the Quincecare duty; rather, he concluded that despite those failings, Moorwand was not put on enquiry that funds were being misappropriated. The high threshold for interfering with the trial judge's evaluative assessment of the evidence was therefore not met.
Court of Appeal allowed the appeal, restoring the trial judge's original decision dismissing the Hamblins' claim. The judgment is significant for payment services providers as it confirms that the Quincecare duty applies to electronic money institutions, while reaffirming that a trial judge's factual assessment of whether a provider was "put on enquiry" attracts a high threshold.
16. HMT publishes consultation on modernising payment services regulation
On 14 July 2026, HMT published a consultation on modernising and future-proofing the legislative framework for the regulation of payment services and electronic money in the UK. The consultation covers the Payment Services Regulations 2017 and the Electronic Money Regulations 2011, and follows the Government's National Payments Vision. The consultation sets out proposals across the following key areas:
- delegation of certain firm-facing requirements from legislation to the FCA, while retaining core provisions such as the regulatory perimeter and key definitions in statute;
- regulation of tokenised payments, including stablecoins and tokenised deposits, through a single set of regulated activities for both fiat and tokenised payment services;
- adaptation of the regulatory framework to support the development of agentic payments, including updates to authentication and liability requirements;
- establishment of a new right of access for variable recurring payments and a long-term Open Banking framework under the Data (Use and Access) Act 2025; and
- consideration of enhanced senior manager accountability to address financial crime risks in the payments sector.
The consultation closes on 6 October 2026.
ESG
No recent updates.
Other
No recent updates.
