Your guide to this week in regulation

Last week, the All-Party Parliamentary Group on Investment Fraud and Fairer Financial Services voiced its criticism of UK financial regulation, including apparent “systemic flaws” that present risks of misconduct and fraud to consumers. Such views sit uncomfortably alongside the UK Government’s deregulation-growth agenda. Despite this, this week, regulators’ work continues in reforming and refining the regulatory infrastructure that underpins customer outcomes; with our leading item addressing the complaints and redress system. 

Up next, standards in second charge mortgages are in the spotlight against a backdrop of rising mortgages rates brought about by prevailing concerns around inflation and energy prices.

Elsewhere this week, we pick up latest developments in liquidity frameworks for banks and building societies, as well as recent speeches from regulators around growth plans including for the G20 Cross border Payments Roadmap. 

Complaints and redress system reform

The FCA has reported a major step forward in its joint work with the Financial Ombudsman Service (FOS)and the Government to modernise the UK redress system releasing a consultation (CP5/26) and finalised guidance on identifying and rectifying harm. The aim is to make the complaints journey quicker, clearer and more predictable for both consumers and firms. Key changes include a new complaints registration stage, updated dismissal grounds and clearer guidance on the fair and reasonable test, all designed to strengthen alignment and improve day‑to‑day functioning of the framework.

For firms, the FCA expects greater certainty, clearer expectations and earlier engagement when issues emerge. This should support better decision making and improve how firms escalate and manage wider redress concerns.

For consumers, the FCA highlights a smoother process, faster compensation where due and earlier identification of harm. The regulator has updated how it assesses harm across markets to reduce delays and provide more consistent outcomes. It stresses that strong protection depends not just on rules but on how effectively the system works in practice.

Firms should strengthen their complaint‑handling and escalate issues early to support a faster, fairer, and more consistent redress system.

Read more on creating a redress system that works better for consumers and firms

Read more on CP26/9: Modernising the Redress System

Read more on FG26/2: Good and Poor Practice on identifying and rectifying harm

Second charge mortgage standards fall

The FCA has warned that second charge mortgage firms must raise standards after finding weaknesses in advice, affordability checks and fee transparency. The review found that some firms failed to consider key living costs, steered customers towards debt consolidation without clear justification and kept poor records. It also found fees were often unclear, including being added to loans, making it harder for borrowers to compare options. The FCA consider these issues matter as second charge customers are often heavily in debt and have limited financial resilience.

The FCA is calling on all second charge lenders and brokers to review the findings and take appropriate action, with brokers particularly focusing on record keeping and quality assurance. It has already engaged with firms included in the review to ensure its findings are addressed and has seen early improvements in customer understanding. Over the next year, the FCA will continue to work with the market to drive improvements, monitor firms closely and consider mortgage policy changes to support good outcomes for those consolidating debt.

Read more on second charge mortgage firms

Liquidity framework consultation

Phil Evans at the PRA, delivered a speech setting out new proposals to modernise the UK’s liquidity framework for banks and building societies. The PRA has launched a consultation (CP5/26) aimed at updating the UK’s liquidity framework so that firms are better prepared for the realities of fast-moving stress events.

The reforms draw directly on lessons from recent banking failures, most notably Silicon Valley Bank in 2023 which demonstrated how digital banking and social media can accelerate deposit outflows beyond what traditional liquidity standards were designed to withstand.

To strengthen resilience, the PRA is proposing that firms enhance the way they assess and manage liquidity risks by supplementing the existing standards with more dynamic expectations. Under the proposals banks would be required to run stress tests that capture rapid-onset liquidity pressures, reflect modern customer behaviour and identify operational or market frictions that could delay the mobilisation of liquid assets.

Overall, the PRA describes the reforms as a proportionate modernisation, a much needed “glow up” to ensure the liquidity framework remains fit for purpose. The consultation closes on 17 June 2026.

Read more on modernising the liquidity framework for banks and building societies

Read more on CP5/26 – Modernising the liquidity policy framework

Cross-border payments push ahead

Andrew Bailey used his Financial Stability Board (FSB) Payments Summit speech to welcome the progress made under the G20 Cross-border Payments Roadmap while stressing that major gaps remain. He noted that most priority actions are complete, including harmonised ISO 20022 requirements and longer Real Time Gross Settlement (RTGS) operating hours, which together improve data quality and settlement speed. He also highlighted stronger AML and CFT standards and early signs of progress from the Committee on Payments and Market Infrastructure (CPMI) monitoring survey.

Despite this, Bailey warned that end users have seen limited improvement so far. Adoption of data privacy reforms and Legal Entity Identifiers remains patchy, and many frictions continue to slow and raise the cost of international transfers. He argued that public bodies and the private sector must now intensify implementation efforts to meet the 2027 G20 targets.

Bailey announced new Jurisdiction Action Plans, regional programmes and a 2027 review of data and regulatory frameworks. He urged firms to take coordinated action to improve cost and transparency and to seize opportunities from digital technologies. Firms should review their cross-border capabilities and prepare for renewed expectations on speed, transparency and compliance.

Read more on reforming cross-border payments

FCA outlines joined‑up growth plan

David Geale used his MoneyLIVE Summit speech to set out how the FCA and PSR intend to support growth while keeping strong safeguards in place. He confirmed that consolidation of the PSR into the FCA is progressing, with joint horizon scanning and aligned payments priorities already underway. The goal is simpler regulation, clearer responsibilities and smoother engagement for firms.

He stressed that the FCA will continue to rebalance risk where rules create unnecessary friction. Recent mortgage interventions were highlighted as an example of enabling innovation while retaining responsible lending standards. The same approach underpins changes to contactless payments, with firms now able to set their own limits provided they have strong fraud controls.

The FCA plans to accelerate Open Banking and publish a roadmap for Open Finance this month. Work continues on crypto and stablecoin regulation, with final rules due this summer. Geale emphasised the need for public‑private partnership to strike the right balance between growth and protection. He encouraged firms to respond to the current crypto consultation, which was only had a short time left before it closed.

Read more on stepping back, staying safe: a joined-up approach to growth