Your guide to this week in regulation

As we wrap up for the festive season, this final newsletter of the year brings you the latest in UK financial services regulation. In keeping with one of the year’s overriding themes, the Financial Conduct Authority (FCA) is simplifying insurance rules to cut costs and reduce admin, while maintaining protections for smaller firms. There’s also a push to address fairness in motor insurance pricing, and a landmark package to boost the UK’s investment culture. Looking ahead, stablecoins are set to become a regulatory priority, and the new FCA Firm Checker tool aims to help consumers avoid scams. 

Thank you for reading this year. Wishing you a restful Christmas and a successful start to 2026. 

FCA simplifies insurance rules 

The FCA has confirmed final changes to simplify insurance rules and reduce regulatory costs, while maintaining protections for smaller commercial customers. Insurers will now have greater flexibility over product review frequency and staff training requirements. 

Further reforms are planned for next year, including reviewing international rule applications and Consumer Duty requirements. Other proposals include: 

• Removing three insurance data returns
• Reviewing packaged bank account eligibility and disclosure rules
• Streamlining collective investment client asset rules
• Deleting outdated Handbook references

The FCA also aims to support smaller firms through sector guides for outcomes-based regulation, starting with consumer credit in 2026. Graeme Reynolds, FCA director, emphasised ongoing engagement: “We want firms to keep engaging with us on further simplifications for the insurance sector.” 

Read more on how the FCA is simplifying insurance rules 

Motor insurance pricing and ethnicity 

The FCA has published findings on motor insurance pricing and local area ethnicity in England and Wales following concerns raised by Citizens Advice. Their analysis of six million policies shows that most price differences are explained by risk factors such as traffic, theft, and claims costs. Insurers do not use ethnicity in pricing, but geographic risk correlates with ethnicity in some areas. 

While residual differences remain after adjusting for risk, the FCA notes these cannot be fully explained and may relate to modelling limitations or other cost allocations. The regulator stresses that reducing premiums in high-risk areas requires tackling external cost pressures and claims costs. The FCA urges firms to act on proposals from the Motor Insurance Taskforce and Financial Inclusion strategy to improve affordability and access. Meanwhile, the FCA continues to work to secure fair outcomes, including £200m compensation for underpaid claims. 

Read more on motor insurance pricing and local area ethnicity 

FCA pushes for investment culture 

The FCA has unveiled a landmark package to strengthen the UK’s investment culture, aiming to empower retail investors and maintain the UK’s global financial standing. Key proposals include: 

• Simplified retail disclosures: Moving away from rigid templates, it hopes that firms will have flexibility to present clearer, engaging information on returns, costs, and risks.
• Clearer client boundaries: New rules will streamline how firms classify professional investors, removing arbitrary tests while maintaining high thresholds for opting out of retail protections
• Regulatory evolution: The FCA seeks industry views on adapting regulation to support informed consumer risk-taking and innovation. 

These changes promise a more agile wholesale market and improved consumer confidence in investing. Firms should consider responding to DP25/3 on expanding consumer access, reviewing CP25/36 on client categorisation and conflicts of interest, and preparing for PS25/20 introducing new disclosure rules under Consumer Duty. 

Read more on FCA package to boost UK investment culture 

Stablecoins and growth drive the FCA’s agenda 

The FCA has unveiled ambitious plans for 2026, prioritising UK-issued stablecoins to deliver faster, more convenient payments. Firms can apply to test stablecoin products in the FCA’s regulatory sandbox by 18 January 2026, as part of efforts to foster innovation and policy development. 

This announcement follows the FCA meeting nearly all of its 50 growth commitments for 2025. Key achievements include: 

• Capital markets boost: Launch of PISCES, a private stock market, and new prospectus rules to ease capital raising.
• Digital innovation: The world’s first Supercharged Sandbox with Nvidia and a Scale-up Unit for fast-growing firms.
• Regulatory efficiency: Reduced data requests and proposed simplification of the Senior Managers and Certification Regime.
• Global reach: Expanded presence in the US and Asia-Pacific to attract investment. 

Looking ahead, firms can expect initiatives on SME lending, digitalisation, and deeper US-UK market integration. Firms planning to issue stablecoins should apply for sandbox testing by 18 January 2026. 

Read more on Stablecoin payments as a priority for 2026 

FCA launches firm checker 

The FCA has introduced Firm Checker, a new tool designed to help consumers verify whether a financial services firm is authorised and has the correct permissions. This initiative aims to combat financial crime, with FCA research revealing that around 800,000 people lost money to investment or pensions-related scams in the year to May 2024. 

Fraudsters often use social media, phone calls, and messaging apps to lure victims. By confirming a firm’s authorisation and matching contact details via Firm Checker, consumers can significantly reduce the risk of fraud. Sheree Howard, FCA Executive Director of Authorisations, urges: “Use Firm Checker to confirm the firm is authorised and help fight financial crime.” 

Authorised firms also offer added protections, including access to the Financial Ombudsman Service and the Financial Services Compensation Scheme.  Firms can help consumers by highlighting to their consumers that they can use the Firm Checker before engaging with any financial service. 

Read more on the FCA Firm Checker to fight financial crime