Your guide to this week in regulation

This week, the Prudential Regulation Authority (PRA) makes substantive proposals to address the effect of so-called ‘prudential drag’ in regulatory thresholds, although affected firms will have to wait until 2031 for the changes. With similar intent, the Financial Conduct Authority (FCA) has set out proposals for its new transaction reporting regime, which starts in April 2028, with the challenging aim of both reducing the regulatory burden on firms whilst maintaining effective oversight of UK financial markets. 

Elsewhere, the European Commission is consulting on important measures around the ‘right to be forgotten’; a reminder that fair access for customers with health conditions remains high on Europe’s agenda. 

We conclude this week with the PRA’s latest feedback on expected credit loss accounting which shows steady progress in data, models and climate work, although observed practice remains variable. And finally, the FCA’s final rules aligning listed issuers’ disclosures with the UK Sustainability Reporting Standards (UK SRS) are confirmed to take effect from 1 January 2027. 

Automatic updates for PRA thresholds 

The PRA has launched a consultation (CP13/26) on a framework that would update many fixed regulatory thresholds automatically every five years. Thresholds set as fixed sums drift from their original calibration as prices and the economy grow, which can pull more firms into tougher requirements over time. The PRA calls this effect prudential drag. 

The PRA proposes to: 

• index 128 thresholds across its Rulebook and guidance
• link updates to growth in UK nominal gross domestic product, with 2026 as the base year
• make the first update on 1 July 2031, then every five years, with six months’ notice before each change, and
• never lower a threshold if the economy shrinks.

Firms that grow faster than the economy will still cross thresholds. A discussion paper within the same consultation seeks evidence on more complex areas, such as internal ratings-based models. Banks, building societies, insurers and credit unions close to a threshold will be more prone to these proposed changed. Responses are due by 7 February 2027. 

Read more on CP13/26: Updating regulatory thresholds 

Transaction reporting transition guidance 

The FCA has opened a consultation (CP26/34) to help firms move to its new transaction reporting regime, which starts on 3 April 2028. It builds on the final rules published in August, which the FCA expects to cut firms’ reporting costs by over £100m a year. 

The proposals include: 

• guidance on the main changes in the new rules, with worked reporting examples;
• transitional provisions that make clear which regime applies during the switch;
• carrying relevant existing guidance into a new Transaction Reporting User Pack; and 
  consequential Handbook changes as the current UK rules derived from EU law are repealed.

The FCA has also published draft schema files and validation rules, so firms can begin system changes now. A further consultation on the User Pack will follow in the first quarter of 2027, with a final version due by 3 April 2027. Reporting firms, approved reporting mechanisms and other submitting parties can respond to this consultation until 6 November 2026. 

Read more on CP26/34: Preparing for the new transaction reporting regime 

Fair financial access after cancer 

The European Commission has opened a consultation on fair access to financial services for people who have had cancer. It wants a past diagnosis to stop counting, after a set period from the end of active treatment, when firms price products such as life insurance or mortgages, or decide who can access them. This is known as the ‘right to be forgotten’. 

The consultation asks:

• how Member States can put an effective right to be forgotten in place;
• whether national frameworks should go further than the consumer credit rules already in EU law; and
• what insight survivors, medical experts, insurers and lenders can offer. 

Eleven Member States have legal frameworks and four rely on voluntary codes. The Commission plans to publish guidance by the end of 2026 and has not ruled out legislation. UK groups with EU insurance or lending operations can test their underwriting criteria against this. Responses are due by 27 October 2026. 

Read more on the Commission’s consultation on fair access to financial services for cancer survivors 

PRA feedback on credit loss accounting 

The PRA has written to chief financial officers (CFOs) of selected banks and building societies with feedback from its review of auditors’ 2026 reports on expected credit loss accounting. Firms continue to improve their capabilities, controls and governance. Aggregate provision coverage is at its lowest since before the pandemic, which the PRA links to better asset quality. 

The letter covers three themes: 

• On data governance, controls were broadly effective, but the PRA wants clearer accountability, stronger data quality controls and better data lineage
• On model risk, redevelopment and monitoring continue to progress unevenly
• On climate risk, firms have advanced their analysis, but are less able to show how scenario outputs feed into provisioning judgements

An annex sets out better and weaker practice, including on securitisations and recovery assumptions. For its 2027 review, the PRA has asked auditors for views on progress and on how firms monitor credit risk in private market exposures. Firms can benchmark against the annex and share their own assessment with auditors. 

Read more on the PRA’s thematic feedback on expected credit loss accounting 

Listed issuers’ sustainability rules finalised 

The FCA has published final rules (PS26/19) requiring listed issuers to report sustainability and climate disclosures against the UK SRS, the UK-endorsed version of the International Sustainability Standards Board standards. The rules replace the existing climate disclosure requirements and apply to accounting periods starting on or after 1 January 2027, with first reports due in 2028. 

Following consultation feedback, the FCA has adopted a ‘comply or explain’ approach across all disclosures, including climate. International companies with a secondary listing and depositary receipt issuers will also report on this basis, rather than signposting their home-country disclosures. Transitional relief runs for one year for Scope 3 emissions and two years for wider sustainability disclosures. 

Through Primary Market Bulletin 66, the FCA is also consulting on a new technical note setting out its ‘comply or explain’ expectations, with feedback due by 28 October 2026. A webinar on 19 October 2026 will explain the new requirements. Listed banks, insurers and asset managers can use both to plan their first reports. 

Read more on PS26/19: Aligning listed issuers’ sustainability disclosures with international standards 

Read more on Primary Market Bulletin 66