Technical

Your guide to this week in regulation

By:

Paul Staples

16 Mar 20266 min read

Welcome to our weekly round-up for UK financial services regulation. Paul Staples summarises the key announcements and developments. Be sure to subscribe to receive our updates in your inbox every week.

This week, the Financial Conduct Authority (FCA) presents the next chapter of its “Regulatory Priorities” as it seeks to refresh, replace and refine a long stream of historical portfolio letters. We lead with its report for the consumer investment sector and other sectors reports will follow this month. This latest concise report is therefore essential reading for the primary audience that includes over 5,000 firms with more than 7,000 appointed representatives.

Next up, innovation provides the driver for the Bank of England’s (BoE) latest consultation around the onboarding of new central counterparties (CCPs).

And following the recent announcement of Katharine Braddick as the next Deputy Governor for Prudential Regulation at the Bank of England and Chief Executive of the Prudential Regulation Authority (PRA) (to succeed Sam Woods from June 2026), we highlight the latest PRA publication relating to recognised exchanges and main indices.

We conclude this week with further insights on the prevention of financial crime and requirements for third-country branches from the European Banking Authority (EBA).

FCA sets consumer investment priorities

The FCA’s Director of Consumer Investments, Lucy Castledine, has given a speech setting out priorities for the consumer investments sector. Announcing the FCA’s new Regulatory Priorities report for consumer investments, she outlined that the regulator wants firms to focus on four priorities: building a stronger investment culture, strengthening trust, securing good customer outcomes and tightening financial crime controls. The report replaces previous portfolio letters and acts as a single reference point for advisers, wealth managers, SIPP operators, investment platforms and other firms in the consumer investment market. The FCA expects boards and chief executives to read it closely and act where needed.

Key points for firms include the need for clearer communication, better support for consumers, stronger governance and effective financial crime measures. Castledine highlighted the need for balanced risk disclosures and improved risk and reward communication. The regulator has clarified expectations on mainstream investment risk warnings and continues to refine guidance with industry.

Castledine outlined that targeted support remains a major delivery area ahead of the launch of the targeted support regime on 6 April 2026. The authorisation gateway is now open, and firms can still access the FCA’s pre-application support service (PASS). The regulator plans to publish additional information soon to support firms in complying with the new regime.

Mobilising new UK CCPs

The Bank of England has opened a consultation on a new policy setting out how it will use its requirements and permissions powers to support the mobilisation of new central counterparties (CCP). Mobilisation is a voluntary, time limited stage after recognition that lets a new CCP operate under strict de minimis limits while it finishes building its capabilities and completes live testing. The Bank proposes that firms apply for voluntary requirements that cap activity at minimal levels and, where needed, seek temporary permissions to modify or waive certain rules. All rules except the Fundamental Rules may be in scope for modification. Mobilisation is expected to last up to 12 months.

The proposals aim to advance financial stability by restricting risk during early operations and to support innovation by removing practical barriers to market entry. Prospective CCPs will need credible plans to meet all unmodified rules and full capital requirements by the end of mobilisation. The consultation closes on 4 June 2026.

Recognised exchanges rules finalised

The PRA recently published Policy Statement PS6/26, setting out its final approach to recognised exchanges and main indices in the context of the UK Capital Requirements Regulation (CRR).

The policy statement confirms the introduction of a new Recognised Exchanges Part in the PRA Rulebook, which will specify conditions under Article 4(1)(72)(c) of the CRR to identify recognised exchanges or assets traded on these exchanges. The final rules also confirm that the PRA will incorporate into the Rulebook Glossary the list of main indices currently contained in EU technical standards. Supervisory Statement SS20/13, covering third country equivalence aspects of the CRR’s credit risk provisions, will also be revoked as part of the transition to the new framework.

The conditions for recognised exchanges and the revocation of SS20/13 will take effect on 1 July 2026. The implementation date for the restated main indices list and other amendments will be 1 January 2027. Affected firms should review the new requirements and prepare to update internal assessments and capital processes accordingly.

OPBAS reports stronger AML supervision

OPBAS has published its 2024 to 2025 supervisory report, confirming steady improvements in anti-money laundering oversight by the professional body supervisors for the legal and accountancy sectors. The FCA will become the single AML and counter terrorist financing supervisor for selected professional services once legislation is in place, and OPBAS stresses the need for an orderly transition. It reports that baseline compliance is good, although weaknesses remain in supervision, enforcement, and how some bodies use intelligence.

Key findings include recurring breaches in customer due diligence, risk assessments and record keeping. Some supervisors still lean towards supporting members rather than challenging poor practice, which slows effective intervention. Enforcement activity varies widely, with low average fines in the accountancy sector and delays in taking action across several bodies. OPBAS also highlights wider system risks including proliferation financing, inconsistent use of intelligence sharing tools, and reliance on third party AML software without clear assurance.

EBA finalises TCB Reporting and Capital Rules

The European Banking Authority (EBA) has finalised requirements for third-country branches (TCBs) under CRD VI, introducing a harmonised framework for financial and regulatory reporting with both core and supplementary components. Reporting is streamlined, covering assets, liabilities, intragroup transactions, and head undertaking prudential metrics. Firms are advised to prepare their systems early to avoid reliance on manual processes. The EBA has also published guidelines for capital endowment, requiring TCBs to hold high-quality, marketable debt securities that can instantly absorb losses, such as those issued or guaranteed by EU governments or central banks. Branches must monitor asset concentration, currency alignment, and issuer location to ensure compliance.

The guidelines come into force on 11 January 2027, excluding head office guarantees and covered bonds, with initial reporting submissions to follow by 31 March 2027.

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