Your guide to this week in regulation

This week sees a collection of major regulatory developments, with implications across wholesale markets, consumer credit and cryptoassets.

In response to its 2025 Mansion House speech commitment, we lead with the Financial Conduct Authority’s (FCA’s) consultation for substantial changes to scope and proportionality across the Consumer Duty, including for wholesale markets. 

This week, the Financial Conduct Authority (FCA) publishes the Mills Review, its landmark assessment of how artificial intelligence will reshape retail financial services by 2030. The review identifies four major shifts and seven recommendations for the regulator, and reaffirms that the Consumer Duty will remain the central governance anchor for AI.

Meanwhile, the FCA's mystery shopping findings on basic bank accounts show that a third of experiences rated poor or very poor. Nine major banks have now committed to remediation plans..

Elsewhere, the FCA's multi-firm review of legacy unit-linked pensions finds that customers in closed books often receive poorer value than those in newer products, with poor legacy data being a common aggravating factor. We also cover latest proposals for  investment cost disclosures across platforms, advisers and wealth managers which aim to align with the Consumer Composite Investments regime ahead of its implementation in June 2027.

We conclude this week with an important update on the future of retail payments infrastructure, setting out the governance model and roles now taking shape.

Mills Review: AI to reshape financial services

The FCA has published the Mills Review, its landmark assessment of how artificial intelligence could transform retail financial services by 2030 and beyond. Led by executive director Sheldon Mills and commissioned by the FCA Board, it is the first review of its kind by a regulator globally. The review identifies four major AI-driven shifts:

• the transformation of firm operations
• the evolution of consumer journeys
• the reshaping of competition and market power
• the amplification of fraud and cyber risks

The review finds that 20% of consumers, around 11 million UK adults, would be likely to use AI capable of acting autonomously within pre-set goals, though concerns about trust and control remain high. The FCA makes seven recommendations to its Board, including securing the regulatory perimeter, scaling up its AI Lab and developing an agentic supervisory model. The review reaffirms that the Consumer Duty remains the governance anchor for AI and warns of the risk of a two-tier system that leaves vulnerable customers behind. An AI good and poor practice publication will follow later this year.

Read more on FCA publishes landmark review into impact of AI on retail financial services

Basic bank account access falls short

The FCA has found that a third of basic bank account experiences rated as poor or very poor, following a mystery shopping exercise across 298 branch and telephone interactions at nine designated banks and building societies. Nine firms are legally required to offer these fee-free accounts, which exist to support people who cannot access standard current accounts. The FCA found firms failing to identify eligible customers, creating avoidable barriers for people without fixed addresses or standard identification, and directing vulnerable customers towards unsuitable online-only journeys without recognising their circumstances.

The nine banks have each agreed individual remediation plans and, through UK Finance, a collective commitment to offer the right account first time, support non-standard identification, and identify vulnerability early. The FCA will monitor progress closely and has said it will take further action if improvement is insufficient.

Read more on Banks told to improve access to basic accounts

Legacy pensions: value gap must close

The FCA has called on all unit-linked non-workplace pension and savings providers to improve value for customers in legacy products, following a multi-firm review. The market covers around 17 million policies and over £500 billion in assets, with roughly half held in products now closed to new business. The FCA found that poorer value in closed books was driven by complex and layered charging structures, older product designs and weaknesses in firms' data, and that firms often made broad value assessments that failed to account for differences between individual products and customer groups.

Good practice was identified across parts of the market: some firms have capped or reduced charges, rationalised fund ranges or migrated customers to better-value alternatives. However, the FCA found that many firms did not clearly understand the nature and value of older policy benefits, partly due to incomplete data on legacy systems. The Pension Schemes Act 2026 will introduce contractual override powers for workplace pensions, and the FCA is engaging HM Treasury on whether these could extend to non-workplace products.

Read more on Pension firms must do more for customers in older pensions and fund savings

Investment disclosure simplified

The FCA has launched consultation paper CP26/24, proposing to simplify the rules for how platforms, advisers and wealth managers communicate investment costs to consumers. The proposals bring cost disclosure requirements derived from the Markets in Financial Instruments Directive (MiFID) in line with the Consumer Composite Investments (CCI) regime, which comes into force in June 2027. A review of 132 current pre-sale disclosure documents published alongside the consultation found that only 6% were written in plain English and that all were more complex than GCSE level.

Under the proposals:

• distributors would present their own costs alongside product costs in the CCI format when selling products
• firms would account to customers regularly for the total cost of investing
• rules on disclosure of interest on client cash and fees would be consolidated

The consultation closes on 21 August 2026, with a policy statement and final rules expected by the end of 2026.

Read more on Financial regulator to simplify investment disclosure regime

Retail payments infrastructure takes shape

The Payments Vision Delivery Committee (PVDC), comprising HM Treasury, the Bank of England, the FCA and the Payment Systems Regulator (PSR), has published an update on roles and responsibilities for the future retail payments ecosystem. The publication sits alongside the Retail Payments Infrastructure Board's consultation on the design of next-generation infrastructure, and sets out the cross-authority framework within which firms and industry participants will operate.

The new model separates the design and governance of the core infrastructure from the competitive products and services that sit around it, with an industry-owned Delivery Company responsible for procuring and funding the build. Pay.UK will continue to operate existing interbank systems during the transition.

The PVDC confirms that the core infrastructure will remain regulated by the PSR, transferring to the FCA on consolidation of the two bodies. Consumer protection, financial crime controls and the commercial model for the infrastructure are among the issues the consultation is designed to address. Payment businesses should engage with the RPIB consultation to influence the design of infrastructure that will underpin UK payments for the next generation.

Firms with material payments operations should review the PVDC update and consider responding to the RPIB consultation to shape the future infrastructure framework.

Read more on Payments Vision Delivery Committee update on future retail payments infrastructure