Your guide to this week in regulation

This week, we lead with the Financial Ombudsman Service (FOS) and the Financial Conduct Authority (FCA) setting out the next phase of redress system reforms, introducing a new registration stage and powers to dismiss unsuitable complaints from October. The FCA has also increased its scrutiny of Annex 1 firms, unregulated lenders, safe custody providers, money brokers and financial leasing companies, warning that registration applications will take longer as it works to address financial crime risks.

In addition, the FCA has finalised rules simplifying information flows for UK equity initial public offerings and published new guidance on climate adaptation and resilience for firms exposed to physical risks such as flooding.

We conclude this week with the European Banking Authority (EBA) consulting on a new reporting framework for validating initial margin models built on the ISDA Standard Initial Margin Model, with responses due by 2 November 2026.

FOS and FCA modernise redress system

The FOS and the FCA have announced the next phase of reforms to modernise the UK redress system, following their CP26/9 consultation and feedback from industry and consumer groups.

The changes introduce a new registration stage, checking complaints are within scope and ready for investigation before a caseworker is allocated. New powers will let the FOS dismiss complaints better suited to court, law enforcement or another dispute resolution process, or where there has been no financial loss, material distress or inconvenience. The FOS will also update its rules so decisions reflect the standards applicable at the time of the act or omission complained of, rather than being applied retrospectively.

The dismissal powers take effect on 1 October 2026. The registration stage follows a further consultation on differential case fees later this year, with rollout planned for 2027.

Read more on modernising the UK redress system

FCA sharpens Annex 1 firm scrutiny

The FCA has set out concerns about risks among Annex 1 financial institutions, firms within scope of the money laundering regulations but not authorised under the Financial Services and Markets Act. These include unregulated lenders, safe custody providers, money brokers and financial leasing companies.

The regulator is concerned some firms rely too heavily on a parent company's financial crime controls, or use off-the-shelf procedures not tailored to their own risks, governance and operations. It also flags growing risks to consumers and markets from unregulated lending conducted through complex structures, including special purpose vehicles.

The FCA is applying closer scrutiny to registration applications, which will take longer as a result, and has issued information requests to around 900 Annex 1 firms to better understand their activities, business models and risks. This follows earlier work with 300 such firms in late 2025 and means all registered Annex 1 firms have now been contacted.

Read more on FCA scrutiny of Annex 1 firms

FCA simplifies rules for equity IPOs

The FCA has published Policy Statement PS26/16, confirming final rules to simplify information flows for UK equity initial public offerings and reduce execution risk for issuers.

The changes remove the seven-day waiting period between publication of an approved prospectus and connected research, and the one-day wait that applied where issuers held a joint briefing for connected and unconnected analysts. Rules requiring syndicate banks to share the same information with unconnected analysts as their own research analysts have been deleted, and a technical drafting error in the investment research rules has been corrected.

The changes took effect immediately on 5 August 2026. The FCA has committed to further work on the wider regime, including the timing of connected research publication and pre-mandate analyst and issuer communications, and welcomes continued engagement on these topics.

Read more on changes to information flows for UK equity IPOs

FCA sets out climate adaptation expectations

The FCA has published a new webpage setting out how physical climate risks, such as flooding, may affect the property insurance and mortgage markets, and how the regulator can help firms prepare.

Climate adaptation means taking action to prepare for these impacts, while climate resilience means being able to anticipate, respond to and recover from them. The FCA highlights that flood risk and related pressures could affect lending decisions, property values and customer outcomes, including through the availability and affordability of insurance. It notes Flood Re's scheduled expiry in 2039 and the growing number of post-2009 properties that fall outside the scheme.

The FCA is encouraging firms to engage directly on emerging risks, apply to its regulatory sandbox to test climate risk approaches ahead of a climate scenarios cohort launching later in 2026, and take part in its Climate Financial Risk Forum.

Read more on climate adaptation and resilience

EBA consults on ISDA SIMM reporting

The EBA has launched a consultation on a new reporting framework to support its validation and ongoing monitoring of initial margin models based on the Standard Initial Margin Model developed by the International Swaps and Derivatives Association.

Since March 2026, the EBA has acted as central validator of pro forma initial margin models under the European Market Infrastructure Regulation. The proposed reporting requirements would cover:

an overview of over the counter trading activities subject to initial margins,
information used to calculate the annual validation fee due to the EBA, and
data on the use and performance of the model, including margin disputes, adjustments and back-testing results.
Firms with less significant trading activity would face lighter, annual-only reporting. The deadline for responses is 2 November 2026, ahead of a planned EBA Decision by the end of the year and an expected first reporting reference date of December 2027.

Read more on the ISDA SIMM reporting framework consultation