Please note that this document does not seek to cover all regulatory developments planned for 2026 and speaks to matters known as of December 31, 2025. It does not consider changes planned for the insurance or pensions sectors. Equally, the timing of a number of updates remains uncertain, and in some instances, we are unable to identify when in 2026 they are anticipated. Furthermore, any expected date is subject to change.
Resilience in uncertain times
UK
The UK’s Prudential Regulation Authority (PRA) set out its strategic priorities for 2025/26 in April 2025. Priority 1 is to maintain and ensure the safety and soundness of the banking and insurance sectors and ensure continuing resilience. Priority 2 is for the PRA to be at the forefront of identifying new and emerging risks, and developing international policy.
Similarly, priority 1 of the European Central Bank’s (ECB’s) supervisory priorities for 2026–2028 is strengthening banks’ resilience to geopolitical risks and macro-financial uncertainties. The 2026 thematic stress test will assess institution-specific geopolitical risk scenarios and their potential to have a significant impact on banks’ solvency and how the geopolitical risk scenarios considered by the banks could have an impact on banks’ funding and liquidity conditions.
The European Banking Authority’s (EBA’s) union supervisory priorities for 2026 include monitoring and addressing financial stability and sustainability in a context of evolving interest rates and geopolitical risks. Stemming from this, a key topic for prudential supervisors’ attention in 2026 is the growing relevance of cybersecurity risks for the EU financial sector, which are heightened by existing geopolitical tensions, as well as an increased reliance on ICT third-party providers and AI.
Competitiveness, growth and simplification
While resilience remains a key priority, the debate on the balance between risk and growth as objectives of regulation also continues.
UK
In March 2025, the UK Financial Conduct Authority (FCA) launched its new five-year strategy with growth mentioned 30 times in the 22-page document and innovation mentioned 15 times.
Sarah Pritchard, deputy chief executive of the FCA, in a November 2025 speech on rebalancing risk for growth said that the FCA is committed to outcomes-focused regulation. Ms Pritchard said that this was essential if the FCA is to be forward looking and supportive of innovation.
The FCA’s 2025/26 work programme starts with a commitment to being “a smarter regulator—one that supports growth, helps consumers and fights crime.” The FCA considers that being a smarter regulator means being more efficient and effective. Amongst the measures intended to achieve this, it lists streamlining data collection and improving regulatory interactions. To reduce the regulatory burden, it also intends to streamline rules, guidance materials and wider communications, now that the consumer duty is in place.
In July 2025, the UK government published its Financial Services Growth and Competitiveness Strategy, a ten-year plan to drive growth and competitiveness in the UK financial services sector. The strategy followed a call for evidence issued in November 2024 and was published in tandem with the Leeds Reforms. The strategy covers five areas of focus:
- delivering a competitive regulatory environment
- harnessing the UK's global leadership of financial services
- embracing innovation and leveraging the UK's fintech leadership
- building a retail investment culture and delivering prosperity through UK capital markets
- setting the UK's financial services sector up with the skills and talent it needs.
The UK regulators also continue to report on how they have advanced their respective secondary competitiveness and growth objectives, under the scrutiny of the House of Lords Financial Services Regulation Committee.
EU
In the EU, there is equal focus on the sector’s competitiveness. In January 2025, the European Commission (Commission) published a communication on a “Competitiveness Compass for the EU”, which set out an action plan in response to the Draghi report published in September 2024. The communication set out the framework for the Commission's work on competitiveness for the next five years.
One of the Commission's key aims is to reduce the regulatory burden. As part of this, in 2025 a series of Simplification Omnibus packages were published. The first related to sustainable finance reporting, sustainability due diligence and the sustainable finance taxonomy (see the ESG section for further information).
Additionally, in March 2025, the Commission set a strategy on a Savings and Investments Union, followed by a set of specific proposals, which aim to promote low-cost saving and investment products at EU level for retail investor(see the Financial markets section for more discussion of the related proposals)s. Longer term work includes removing barriers to consolidation of financial markets infrastructure and taxation barriers to cross-border investment, promoting the EU's securitisation market, and pursuing the reform and harmonisation of insolvency frameworks in the EU.
Further reports striving to advance the competitiveness and simplification agenda in the EU include a study on enhancing EU competitiveness in the banking sector, provided by the Economic Governance and EMU Scrutiny Unit (EGOV) at the request of the European Parliament's Committee on Economic and Monetary Affairs, and the EBA’s Report on the efficiency of the regulatory and supervisory framework developed by its Task Force on Efficiency (TFE).
Both reports contained a number of recommendations for the European Commission. These include prioritising the defragmentation of the banking market, and simplifying and streamlining the prudential framework for banks without compromising resilience (see the Prudential regulation section of this report for further discussion of recommendations). The TFE also propose refocusing EU prudential law from directives to regulations, increasing harmonisation and regulatory transparency, and streamlining level 2 and 3 acts. The EGOV study also recommends the elimination of national gold plating.
Both papers encourage completion of banking union, to reduce national fragmentation and allow for more efficient capital markets. The TFE state “to lay the foundations for increasing cross-border banking, the completion of the banking union should facilitate other measures that support integrated and efficient risk management at consolidated level. This will enable capital and liquidity to flow within banking groups in the banking union.” The efficient flow of capital has long been hampered by areas of fragmentation and a matter of consternation for industry.
The TFE also recommend reconsidering the level of prescriptiveness of legislation governing supervisory processes, to identify areas where more risk-based approaches can be implemented and to increase the risk focus of supervision, thereby reducing administrative costs for banks on lower-risk issues. The TFE’s recommendations were endorsed by the Governing Council of the ECB in December 2025. The ECB also published its own report on “streamlining supervision, safeguarding resilience,” which discusses its ongoing agenda to increase the effectiveness, efficiency and risk focus of European banking supervision “[complementary to] the … recommendations”.
The European Council (Council) also published its conclusions on simplifying the EU’s financial services regulation in December 2025. The Council “acknowledges that over time, the Union’s financial services regulation has become more complex and more extensive than necessary” and “underlines that …simplification should address both the existing stock of regulation and the flow of new Regulation” with a focus on eliminating unnecessary requirements and on measures with high potential impact.
This, the Council suggests, should include ensuring improved coherence between different pieces and different fields of legislation and their implementation, aligning definitions, by removing duplications, out-dated provisions and unnecessary or overlapping reporting requirements. It states, however, that “simplification should not lead to de-regulation, which could put financial stability a risk”.
The Council sets out a number of principles to guide the simplification of the EU’s financial services regulation. These include: preserving the key pillars of the regulatory framework (robust capital and liquidity requirements, strong resolution frameworks, high consumer and investor protection, effective supervision, and a robust framework against money laundering and terrorist financing); public and stakeholder consultation; consistent, thorough and realistic impact assessments; and improving coordination, timing and sequencing in the implementation of legislative acts.
The Council conclude by calling on the European Commission to (amongst other actions): swiftly put forward ambitious simplification packages for the EU’s financial services regulation, with clear priorities and timelines; consider further improvements to the method for impact assessments; and present an analysis of how to ensure that future Union’s financial services regulation becomes less complex and burdensome.
The European Commission is preparing a report on the overall situation of the banking system, including an evaluation of competitiveness, that is expected in Q3 2026. Such a report may be accompanied by further legislative proposals.
Data and reporting
It is well understood that the burden of reporting and data requests imposed on firms is substantial and it is an area consistently viewed as ripe for simplification.
UK
Efforts to reduce reporting burdens, modernise data collection, and enhance the efficiency of supervisory processes are a key part of the PRA's and FCA’s ongoing "Future Banking Data" (FBD) and "Transforming Data Collection" (TDC) programmes.
EU
The TFE is encouraging European authorities to foster mutual data sharing, for example by operationalising the Better Data Sharing Regulation. Additionally, it advocates promoting, through an EBA-led change management process, a regular coordination of EU-level data collections (including, as appropriate, via the Joint Bank Reporting Committee under common rules of procedure). The TFE expect better coordination to lead to a reduction in the need to make overlapping data requests to the financial industry, including the banking sector. They also want the authorities to ensure that data collections are of material value for the supervisory mandate and are based on a need-to-have (rather than a nice-to-have) principle.
Certain specific reporting reforms are discussed further in the relevant sections of this report.
International relations
UK overseas recognition regime
Alongside its Financial Services Growth and Competitiveness Strategy, the UK government laid before parliament, the Financial Services (Overseas Recognition Regime Designations) Regulations 2025 (the ORR Regulations) alongside an explanatory memorandum, and published Overseas Recognition Regimes Guidance (the ORR Guidance). The overseas recognition regime (ORR) is the UK's new “outcomes focused” regime for providing "recognition" of a regulatory regime in an overseas jurisdiction, allowing cross-border financial services into the UK. It is broadly similar in concept to the EU's equivalence and the U.S.'s comparability regimes.
The ORR Regulations, which were made on October 30 and came into force on November 28, 2025, bring together in a comprehensive regime the existing ORRs under the Short Selling Regulations 2025 and the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023 and the equivalence decisions that were inherited when the UK left the EU. They set out the powers and obligations of HM Treasury (HMT) as regards ORR designations, including the power to request information and advice from the financial services regulators and the power to impose conditions when making an ORR designation or revoke a designation. The ORR Guidance further describes the principles and processes that will apply to the ORR regime. Whether, and if so how, this regime is used in 2026 remains to be seen.
UK/Swiss Mutual Recognition Agreement
The UK/Swiss Mutual Recognition Agreement (the Berne Financial Services Agreement (BFSA)) will enter into force on January 1, 2026. This agreement, concluded in December 2023, seeks to set sectors where the UK and Switzerland will mutually recognise each other's domestic laws and regulations on financial services, making it easier for providers to each of the two markets to do business with corporate and high net worth clients in the other.
The BFSA is an outcomes-based mutual recognition agreement covering a range of wholesale financial services, including asset management, banking, investment services, insurance and financial market infrastructure, as well as the provision of investment services to sophisticated high net worth clients. The BFSA allows UK insurance companies to offer certain wholesale insurance services in Switzerland without needing Swiss authorisation, while certain Swiss firms can offer certain investment services to sophisticated clients in the UK without requiring UK authorisation.
In October 2025, the Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025 were published, implementing the UK's commitments under the BFSA. The Regulations introduce:
- a new exclusion under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to allow Swiss firms that are registered with the FCA for specific investment services to supply those services without authorisation
- a corresponding exemption under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 to ensure that Swiss registered firms can engage in financial promotion in certain circumstances without requiring authorisation or approval
- a public UK Financial Conduct Authority register of eligible Swiss firms
- a new category of firm permitted to operate in the UK under the BFSA framework
- new powers and duties to UK regulators (including the FCA, UK PRA and Bank of England) to manage risks, enforce compliance and oversee an orderly wind-down of Swiss firms' UK activities if the BFSA is terminated.
The Regulations will also enter into force on January 1, 2026. The FCA and the PRA have also jointly published guidelines to assist firms considering providing services under the BFSA.
