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. FCA consults on income distribution and operational incident reporting for consolidated tape providers
On 29 October 2026, the FCA published a consultation paper (CP26/39) proposing rules on income sharing among data contributors to the UK equity consolidated tape (CT) and enhanced operational incident reporting for all consolidated tape providers (CTPs). The consultation follows the FCA's July 2026 policy statement on the UK equity CT framework (CP26/31), which required the equity CTP to share a portion of its income with data contributors.
The key proposals in CP26/39 include:
- a 50/50 income distribution model, with half of the shared income distributed among all UK trading venues and Approved Publication Arrangements that contribute post-trade data to the equity CTP, and half reserved for central limit order book or periodic auction trading systems;
- allocation of income to each data contributor based on its share of the total value of trades submitted to the equity CT, excluding trades flagged as non-price forming or not contributing to price discovery;
- a 4.5x weighting for trades executed on smaller trading venues (those accounting for less than five per cent of total value traded), estimated to roughly triple smaller venues' share of total income;
- enhanced operational incident reporting requirements under SUP 15.18 for all CTPs, in line with the standards for UK recognised investment exchanges; and
- where an incident meets the thresholds under both SUP 15.18 and MAR 9, reporting through the SUP 15.18 process only, to avoid duplicative reporting.
The consultation closes on 17 December 2026. The FCA aims to publish its policy statement in Spring 2027.
2. HM Treasury publishes 2026 Budget with measures relevant to financial services
On 28 October 2026, the Chancellor delivered the 2026 Budget, setting out fiscal plans including several measures impacting the financial services sector. The Government stated that the Budget aimed to reduce borrowing while assisting families with the cost of living.
Key measures in the Budget relevant to financial services include:
- the Bank Corporation Tax Surcharge will temporarily increase from 3% to 6% for 15 months from 1 January 2027 to 31 March 2028, to fund household energy support;
- the introduction of the Financial Services and Markets Bill 2026, which the Government claims will reduce the overall burden of the Senior Managers and Certification Regime by 50%;
- income tax rates on savings and property income will each increase by a further two percentage points from April 2027; and
- the cash ISA subscription limit will be maintained at £20,000 per year, with a new ISA incentive for first-time stocks and shares investors to be explored with the industry.
3. FCA publishes speech on market integrity in a digital age
On 23 October 2026, the FCA published a speech delivered by Nikhil Rathi, chief executive of the FCA, at the Corporation of the City of London's annual City Dinner. The speech addresses how the FCA intends to maintain market integrity as technology accelerates, warning of a dangerous "innovation delta" where regulatory institutions lag behind rapid technological change.
Key points addressed in the speech include:
- the FCA will make greater use of technology and intelligence, including AI tools, to give supervisors a richer risk picture and will make more assertive use of its existing powers to tackle system‑wide risks and financial crime;
- stronger partnerships between regulators, industry, government and international counterparts are essential to protect market integrity;
- the FCA will engage with firms to streamline duplicative “tickbox” compliance and assurance work, reconsider the three lines of defence model, and move further towards outcomes‑based regulation so that resources devoted to combatting crime and managing risk deliver better results; and
- a forthcoming FCA–Bank of England roadmap on digital assets will dovetail with ongoing industry initiatives, as part of a broader effort to adapt the regulatory perimeter and tools to new technologies and market structures.
The speech also underlines that Parliament has already provided a wider toolkit (including new legislation and the critical third‑party regime) to address system‑wide harms, and that the FCA will focus on how best to deploy these powers rather than asking only whether a risk falls strictly within its perimeter.
The FCA calls on firms and civil society to engage early on emerging risks and opportunities, so it can act at pace and provide the confidence needed for innovation and growth to flourish on the back of strong market integrity.
4. EU Commission publishes delegated regulation on transparency requirements for derivatives
On 23 October 2026, the Official Journal published Commission Delegated Regulation (EU) 2026/1763 of 13 July 2026 (the Regulation), amending the MiFIR regulatory technical standards on transparency requirements for trading venues and investment firms in respect of derivatives.
The Regulation introduces static minimum thresholds and a static determination of liquidity for the pre- and post-trade transparency regime for derivatives. It amends Delegated Regulation (EU) 2017/2194 so that package orders are subject to pre-trade transparency only where each component is itself subject to those requirements. Amendments to Delegated Regulation (EU) 2025/1155 specify the input and output data for the OTC derivatives consolidated tape and exclude exchange-traded commodities and exchange-traded notes from the bond consolidated tape.
The Regulation enters into force on the twentieth day following publication in the Official Journal, however some amendments will apply from 1 March 2027.
Banking and Prudential
5. Government publishes the Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026
On 22 October 2026, the Government published the Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 (SI 2026/1116) (the Regulations) together with an explanatory memorandum.
The Regulations form part of the UK's programme under the Financial Services and Markets Act 2023 to revoke and replace assimilated EU financial services law. They restate, with modifications, the equivalence regimes in the UK Capital Requirements Regulation as a single Overseas Prudential Requirements Regime (OPRR).
The OPRR largely preserves the scope and effect of the existing equivalence regimes, and currently equivalent jurisdictions are treated as designated. However, the treatment of exposures to overseas exchanges is changed: such exposures may be treated as exposures to institutions only where the banking regulator in the designated jurisdiction treats them in that way. Otherwise, they will typically be treated as exposures to corporates. The OPRR will also be extended to include overseas eligible covered bonds as a new category of exposure.
The Regulations come into force on 1 January 2027.
Fund Management
6. FCA publishes multi-firm review on conflicts of interest and fair customer treatment in private markets
On 23 October 2026, the FCA published the findings of a multi-firm review examining how firms identify, manage, mitigate and disclose conflicts of interest in private market assets. The review focused on private equity, private credit and real estate firms, reflecting the significant growth of private markets and the increasingly complex business models that can give rise to new conflicts of interest.
The review sets out the following key findings:
- governance arrangements and controls did not always reflect the complexity of firms' business models, and some frameworks had not evolved in line with business growth;
- weaker firms were unable to demonstrate how competing investor interests had been balanced in cross-fund transactions and continuation vehicles;
- gifts and entertainment controls varied significantly, with some firms unable to demonstrate their arrangements operated effectively in practice; and
- information barrier controls in weaker firms relied heavily on training and informal safeguards, with limited compliance monitoring.
The FCA will carry out targeted follow-up work and continue to engage with firms and industry bodies on the findings from this review.
7. FCA publishes user guide on moving fund authorisation applications and notifications online
On 22 October 2026, the FCA published a user guide and updated webpage on the transition of fund authorisation applications and notifications from email to online submission via Connect. These changes will be introduced over a two-year period.
The proposed timeline is set out below:
- from 2 November 2026, certain new scheme authorisation forms, amendment or winding up forms and final notifications can only be made via Connect;
- during December 2026, the FCA plans to move receipt of scheme document filings for authorised and recognised funds to Connect; and
- in early 2027, certain AIFMD applications & notifications will also be moved to Connect.
Firms should ensure that relevant personnel and any third parties responsible for submitting applications have appropriate access to Connect ahead of the 2 November 2026 go-live date.
Senior Managers and Governance
8. PRA consults on Phase Two reforms to the Senior Managers and Certification Regime
On 22 October 2026, the PRA published consultation paper CP14/26 on proposed Phase 2 reforms to the Senior Managers and Certification Regime. This was published alongside FCA consultation paper CP26/37, summarised in entry 9 below.
The proposals build on Phase One changes delivered by the FCA and PRA in April 2026 and anticipate additional regulatory flexibility provided by the Financial Services and Markets Bill 2026, if enacted. For further detail on the Phase One reforms, please see our previous Financial Services SpeedRead here.
The PRA's key proposals include:
- removing the Certification Regime requirements for approximately 139,000 individuals below senior management level, including fitness and propriety assessments, certification checks and inclusion on the Financial Services Register;
- removing the pre-approval requirement for many Senior Management Functions (SMFs), with firms instead notifying regulators of appointments;
- extending temporary SMF cover from 12 to 18 weeks; and
- streamlining prescribed responsibilities, statements of responsibilities and management responsibilities maps.
The consultation closes on 22 January 2027. The PRA expects implementation in the second half of 2027, subject to the passage of the Financial Services and Markets Bill 2026.
9. FCA publishes consultation paper on Senior Managers and Certification Regime review: Phase Two
On 22 October 2026, the FCA published a consultation paper (CP26/37), setting out proposals for the second phase of reforms to the Senior Managers and Certification Regime (SM&CR). The proposals build on the first phase of reforms in Policy Statement PS26/6 and legislative changes proposed by the Government in the Financial Services and Markets Bill 2026. The Government's Financial Services Growth and Competitiveness Strategy sets a shared ambition between the Government, the FCA and the PRA to reduce the regulatory burden of the SM&CR by 50% and reduce the number of roles at banks and insurers requiring approval by 40%, while maintaining robust individual accountability.
CP26/37 proposes the following key changes to the SM&CR:
- making several Senior Management Function (SMF) roles at dual-regulated and Enhanced firms subject to notification rather than pre-approval, and removing FCA-only functions SMF18 (Other Overall Responsibility) and SMF22 (Local Responsibility);
- removing the Certification Regime entirely, instead relying on existing competence and suitability requirements under SYSC to achieve similar outcomes;
- replacing Conduct Rules training requirements with an obligation to notify staff of the applicable rules, and raising the breach reporting threshold for most non-SMF staff to final written warning or dismissal; and
- removing most Prescribed Responsibilities, retaining only those for the Senior Managers Regime (A), financial crime (D) and CASS (Z) for Core and Enhanced firms, and oversight of outsourced internal audit (J-3) for Enhanced firms only.
The consultation closes on 22 January 2027. The FCA aims to publish final rules in the first half of 2027, with implementation approximately six months later in the second half of 2027.
Financial Crime
10. FCA restricts six firms following concerns over anti-money laundering controls
On 23 October 2026, the FCA published a press release announcing voluntary restrictions on six unregulated lenders, known as Annex 1 firms, following concerns about their anti-money laundering policies, controls and procedures.
The restrictions, imposed at each firm's request, limit their ability to take on new customers or conduct new business. This forms part of the FCA's enhanced oversight of Annex 1 firms operating in sectors that present heightened financial crime risks.
Other key points set out in the press release include:
- the FCA is assessing responses to an information request sent to around 900 registered Annex 1 firms to identify and disrupt financial crime risks; and
- regulated firms have been reminded of their due diligence obligations when dealing with Annex 1 firms, including seeking direct confirmation from the firm of its registration status, conducting independent checks of the information it provides, and understanding and managing any risks.
The FCA has indicated it will continue to intervene where firms cannot demonstrate effective systems and controls to manage money laundering risks.
11. FCA consults on updates to the Financial Crime Guide
On 23 October 2026, the FCA published a consultation paper proposing updates to its Financial Crime Guide to help firms strengthen their financial crime systems and controls. The FCA stated that financial crime is becoming more sophisticated, and that the Guide should keep pace with emerging risks linked to AI, cryptoassets and evolving sanctions regimes.
Changes are proposed across the following areas:
- updates to the fraud chapter reflecting supervisory findings on authorised push payment fraud and money mule activity;
- new cryptoasset guidance for firms preparing for authorisation under the Cryptoasset Regulations 2026, effective from 25 October 2027;
- a restructured sanctions chapter covering financial and trade sanctions, reflecting the establishment of the Office of Trade Sanctions Implementation;
- updated data security guidance aligned with the Data Protection Act 2018 and UK GDPR, addressing AI and synthetic identity fraud; and
- clarification of financial crime obligations for firms using Banking as a Service and embedded finance models.
The consultation closes on 24 December 2026.
Retail Services
12. FCA publishes good and poor practice on fair value in consumer finance
On 29 October 2026, the FCA published a good and poor practice document entitled "Fair value in consumer finance", accompanied by a related blog post. The publication sets out findings from supervisory work across the consumer finance sector, reviewing how firms assess, evidence and monitor fair value under the Consumer Duty. Key findings include:
- firms with stronger assessments supported their fair value conclusions with evidence and management information, rather than relying on assumptions or narrative assertions;
- some firms did not assess fair value across different customer groups, including customers with characteristics of vulnerability, making it difficult to identify differing outcomes;
- some firms did not consider the expected total price customers might pay, including contingent charges and non-financial costs; and
- some firms disclosed material fees late in the customer journey or fragmented fee information across multiple documents, limiting customer understanding.
The FCA will continue to monitor fair value through its supervisory work and analysis of relevant data returns.
Digital Finance and Fintech
13. BoE and FCA publish report on artificial intelligence in UK financial services
On 26 October 2026, the BoE and FCA published the findings of their fourth joint survey on the use of artificial intelligence and machine learning in UK financial services. The report updates the regulators' evidence base on AI adoption, governance and risk management, building on previous surveys in 2019, 2022 and 2024. Key findings include:
- 86% of respondents reported using AI, up from 75% in 2024, with generative AI accounting for 56% of all reported AI systems;
- 80% of respondents reported having deployed AI agents, though only 2% reported agents with broad autonomy;
- third-party AI implementations rose to 39% of all reported systems and 53% of high-materiality systems, with significant concentration among cloud and compute providers; and
- oversight of third-party AI systems was the most commonly reported governance challenge, selected by 54% of respondents.
The report forms part of the BoE and FCA's wider programme of work on AI in financial services and will inform ongoing supervisory engagement with firms.
14. FCA consults on cryptoasset perimeter guidance
On 21 October 2026, the FCA published a consultation paper (CP26/36) on proposed guidance addressing new regulatory exclusions from cryptoasset regulation. The consultation follows the laying of the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026 before Parliament, which introduced additional exclusions from the regulatory perimeter ahead of the new cryptoasset regime coming into force on 25 October 2027.
Proposed amendments to the Perimeter Guidance Manual include:
- an exclusion from the arranging activity for technical service providers that merely facilitate access to regulated services of an authorised person or to a decentralised protocol;
- exclusions from safeguarding and administering activities for assets backing qualifying stablecoins, temporary settlement arrangements;
- inclusion of issuing qualifying stablecoins as a potential financial promotion;
- exclusions from financial promotions, dealing and arranging activities for certain payment-related transactions involving UK qualifying stablecoins, with more limited exceptions for other qualifying stablecoins;
- an exclusion from dealing as principal for proprietary trading and market making on a qualifying cryptoasset trading platform; and
- further guidance on how automation, decentralisation and terminology affect the regulatory perimeter.
The consultation closes on 18 November 2026, and the FCA aims to publish final guidance in Spring 2027. Where firms are uncertain about the technical service provider exclusion and submit an otherwise complete application in the cryptoasset application window, the FCA will allow additional time after the application window ends to address incomplete aspects on this topic.
15. FCA consults on decentralised finance guidance
On 21 October 2026, the FCA published a guidance consultation (GC26/7) on decentralised finance (DeFi), proposing non-Handbook guidance to help regulated firms comply with operational resilience and financial crime requirements when providing financial services using DeFi.
The guidance does not create new regulatory requirements but clarifies how existing rules under SYSC 15A, SYSC 6 and the Money Laundering Regulations apply in a DeFi context.
The proposed guidance addresses the following key points:
- that the approach to perimeter analysis is the same whether a firm is using a centralised or a DeFi business model;
- how firms should consider and manage DeFi specific risks in their operational resilience processes including in relation to technology, governance, security, third parties and incident management; and
- similarly, how firms should manage growing financial crime and sanctions risks associated with DeFi.
The consultation closes on 18 November 2026. The FCA plans to publish final guidance in January 2027.
16. FCA publishes good and poor practice on AI in financial services
On 19 October 2026, the FCA published good and poor practice examples on the use of artificial intelligence (AI) in financial services, announced in a speech by Jessica Rusu, FCA chief data, information and intelligence officer, at Bloomberg's UK Policy Series. The speech highlighted the FCA's response to the Mills Review and called on firms to maintain clear accountability and plan for failure as AI moves towards agentic systems. For more information on the Mills Review, see our update here.
The examples of good and poor practice draw on industry engagement, supervisory work and initiatives from the FCA's AI Lab to support the safe and responsible adoption of AI. Key takeaways include:
- firms should ensure any use of AI-supported tools complies with their responsibilities to vulnerable customers and under the Consumer Duty;
- proportionate oversight, clear accountability and risk-based controls are needed for effective AI governance; and
- safe and responsible AI deployment often involves systems that consider security requirements, operational resilience, cyber threats and proactive relationships with third parties.
The FCA has indicated that the guidance will be updated as AI technology evolves and that it will work with industry to develop a framework for agentic finance.
Payments
No recent entries.
ESG
17. ESMA and EBA issue technical advice on selected KPIs under the Taxonomy Disclosures Delegated Act
On 29 October 2026, ESMA published a Final Report on technical advice on selected key performance indicators (KPIs) under Commission Delegated Regulation (EU) 2021/2178 (the Taxonomy Disclosures Delegated Act).
ESMA recommends limiting the mandatory operating expenditure (OpEx) KPI to non-capitalised research and development expenditure. It also proposes simplifying group Taxonomy reporting, including by removing the weighted-average KPI, and specific measures to make disclosures more proportionate, clearer and easier to use.
On the same date, the EBA also published its own Final Report, following its July 2026 Discussion Paper. Its recommendations include:
- removing the Fees and Commission's KPI and the Trading Book KPI from the Taxonomy disclosure rules;
- simplifying the investment firms' 'other services' KPI, including capital markets services;
- aligning the grandfathering provisions with the EU Green Bond Regulation, applying only to bonds issued under that Regulation;
- not introducing operational expenditure KPI disclosed by non-financial undertakings in the calculation of financial undertakings’ KPI; and
- simplifying group disclosures by using the parent undertaking's KPIs and, where relevant and subject to defined conditions, complementing them with KPIs for material secondary activities without further aggregation.
Both authorities have submitted their advice to the Commission for its review of the Taxonomy Disclosures Delegated Act.
Other
No recent entries.
Authors: Jake Green, Partner and Bradley Rice, Partner.
