To all of our global readers we would like to take this opportunity to wish you all a Merry Christmas and a Happy New Year.We will resume posting material following the festive period on 6 January 2026 although if there are any significant developments we will endeavour to provide an update.

In our latest briefing note, we look at key regulatory topics for 2026 that will have a significant impact on institutions operating in the UK financial services space. We have not attempted to list every single reform expected next year but rather pick out those with the potential to be most significant, as well as the key regulatory enforcement developments.

On 17 December 2025, HM Treasury published plans to reform the UK’s benchmark regime on the basis that it is no longer proportionate to the risks it sought to address. The proposals would reduce the scope of regulation by 80-90% to include only a small number of benchmarks and administrators. The FCA has confirmed that it is working with Government on this and will consult on the regulatory requirements in due course.It is not yet clear when the new Specified Authorised Benchmark Regime might be introduced. HM Treasury requests responses to its consultation paper by 11 March 2026. It also flags that the proposal may change as a result of those and further stakeholder engagement.Below is a brief summary of how the current proposals would apply:HM Treasury: It will designate benchmarks and/or administrators.Benchmarks would be designated if they have no or few substitutes or it is not reasonably practicable for one or more users to switch to one of the substitutes and, if they were to cease to be provided, there would be an impact on: the integrity of the UK financial system and consumers; or the market the benchmark seeks to measure. Administrators could be designated even if none of their benchmarks have a significant impact individually but taken together they would have a significant and adverse impact on the integrity of the UK financial system and consumers if they were to cease without sufficient notice, were provided on the basis of data that was not fully representative or was unreliable or they were not administered correctly.FCA: The FCA would advise HM Treasury on the application of the designation criteria, set the requirements that designated administrators must comply with (which might differ according to the benchmark), and exercise supervisory and enforcement powers.UK administrators: Only administrators and benchmarks designated by HM Treasury would be regulated. There would be no distinction between critical, significant or other benchmarks, or (in the legislation) between interest rate, regulated data and commodity benchmarks, although the FCA may calibrate the requirements applicable to these different types. The government will consider how to ensure a smooth transition from regulation under the current regime to the new one.Other administrators will not be regulated and there will be no ability to opt into the regime. It is not yet clear how the process of ceasing to be authorised will work.Overseas administrators: Overseas benchmarks and administrators could be designated. The government proposes to create an Overseas Recognition Regime to replace the equivalence route in the Benchmarks Regulation so that, where a designated benchmark or administrator is regulated in a jurisdiction with ORR determination, it would not need to be regulated by the FCA as well.  Where a designated benchmark is administered in a jurisdiction that does not have an ORR determination, the government is considering the options. It could maintain the recognition or endorsement regime under the existing Benchmark Regulation or require them to become regulated as a UK branch or subsidiary with responsibility for the oversight function.Article 2 exempt benchmarks: These would remain out of scope.Contributors: The proposal is to retain obligations for authorised contributors. The government is considering whether to extend the definition of input data to non-price data given the increasing use of ESG metrics and qualitative indicators in benchmark methodologies.Users: Users will no longer be required to use benchmarks on the FCA register. Authorised firms will still have to undertake due diligence on whether a benchmark is appropriate for their business and there should be no regulatory advantage to using a regulated benchmark over an unregulated one. The FCA would be able to make rules on how to manage risk associated with both types of benchmarks and the FCA will consult separately on this.We would be pleased to discuss the new regime and the impact it may have for you in the new year.In the meantime, we wish you a restful break.

In this special edition of our EMEA APAC regulatory insights series colleagues from the EU cover the European Commission’s recent market integration and supervision legislative package – a core pillar of the Savings and Investments Union. The package is a major initiative designed to unlock the full potential of the EU Single Market.Listen to the episode here.This article was originally published by Law 360 on 4 December 2025.

On 19 December 2025, the Albanese Government published, as part of its Better Targeted Super Concessions policy, the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025 and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2025. Together these Bills reduce the tax concessions for people with total super balances over $3 million by imposing new taxes under a new Division 296 of the Income Tax Assessment Act 1997.SummaryDivision 296 tax is imposed at a rate of: 15 per cent on a percentage of earnings equal to the percentage of superannuation balances that exceed the large superannuation threshold ($3 million) for an income year. 10 per cent on a percentage of earnings equal to the percentage of superannuation balances that exceed the very large superannuation threshold ($10 million) for an income year. Special rules for working out Division 296 tax apply to: Individuals with defined benefit interests. State higher level office holders with superannuation interests in constitutionally protected funds. Commonwealth justices and judges in respect of defined benefit interests in a superannuation fund established under the Judges’ Pensions Act 1968. Territory Supreme Court judges in respect of defined benefit interests in their judicial pension scheme. The amount of Division 296 tax is assessed by the Commissioner and is generally due and payable within 84 days of the Commissioner giving the notice of assessment. For defined benefit interests, Division 296 tax is generally deferred for payment until 21 days after the first benefit is paid from the interest. Individuals can have amounts released from certain superannuation interests to facilitate payment of this tax.LISTOThe Albanese Government is also boosting the superannuation savings of more than a million low‑income workers through changes to the Low‑Income Superannuation Tax Offset (LISTO) that ensure they receive a fairer tax concession on their superannuation contributions. The LISTO eligibility threshold will be increased from $37,000 to $45,000 to align with the lowest income tax threshold (after the tax-free threshold). The maximum LISTO amount will be increased from $500 to $810, reflecting the superannuation guarantee rate of 12 per cent. Changes to the LISTO will commence on 1 July 2027 and apply from the 2027-28 income year onward.Next stepsThe Government welcomes feedback from stakeholders on the draft legislation and explanatory materials by 16 January 2026.

On 19 December 2025, the European Securities and Markets Authority (ESMA) issued its latest report on Suspicious Transaction and Order Reports (STORs).The report seeks to provide the market with an overview of the use of STORs in different jurisdictions across the EU and how this has evolved over time.Compared to previous years ESMA notes that there are no major changes, albeit a slight decrease in the total number of notifications received by Member State competent authorities.

On 19 December 2025, there was published in the Official Journal of the EU, Guideline (EU) 2025/2595 of the European Central Bank (ECB) of 10 December 2025 on the supervisory approach by Member State competent authorities (NCAs) to coverage of non-performing exposures held by less significant supervised entities.The Guidelines are addressed to the NCAs of the participating Member States and the ECB.The Guidelines specifies the supervisory approach which NCAs shall use for reviewing the provisioning policies and treatment of assets in terms of own funds requirements of less significant supervised entities established in the same Member States as the relevant NCA.The Guidelines take effect on the day of its notification to the NCAs of the participating Member States.

On 19 December 2025, the Financial Conduct Authority (FCA) issued Handbook Notice No. 136.This Handbook Notice describes the changes to the FCA Handbook and other material made by the FCA Board and ERPC the under their legislative and other statutory powers on 27 November, 9 December and 18 December 2025.On 27 November 2025, the FCA Board approved the following instruments: Dispute Resolution: Complaints Sourcebook (Motor Finance Complaints Handing) Instrument 2025. Consumer Composite Investments Instrument 2025. Complaints Reporting Instrument 2025. Simplification: Conduct and Product Governance of Non-Investment Insurance Business and Other Amendments Instrument 2025. On 9 December 2025, the FCA Board approved the following instrument: Non-Financial Misconduct (No 2) Instrument 2025. On 18 December 2025, the FCA Board approved the following instruments: Commodity Derivatives (Ancillary Activity Exemption) Instrument 2025. Decision Procedure and Penalties Manual (Amendment) Instrument 2025.

On 19 December 2025, the Prudential Regulation Authority (PRA) published a set of low impact amendments to its rules in Low Impact Amendments Finalisation 03/25.The amendments include: The conditional disapplication of the PRA General Provisions to give effect to the deference arrangements under the UK Swiss-Berne Financial Services Agreement. An amendment to the Transitional Measure on Technical Provisions Part of the PRA Rulebook, TMTP Calculation, Rule 5.2. An Amendment to the Insurance Special Purpose Vehicle Part of the PRA Rulebook, Solvency Requirements, Rule 2.2A(3) and an amendment to Supervisory Statement 2/25 – Prudential considerations for insurance and reinsurance undertakings when transferring risk to Special Purpose Vehicles. A collection of miscellaneous amendments to the PRA Rulebook. The PRA is also making the following amendments without further consultation: Updates to hyperlinks in the CRR Firms Reporting Pillar 2 Part of the PRA Rulebook. An amendment to the Fees Part of the PRA Rulebook to reflect confirmed policy.

On 19 December 2025, the Payment Systems Regulator (PSR) issued a consultation paper, CP25/3, setting out changes that will give businesses more information on the card payment (scheme and processing) fees they pay and give the PSR a better understanding of how the level of these fees is set.CP25/3 follows an earlier remedies consultation (CP25/1) and seeks to implement two proposed remedies: Information, transparency and complexity remedy (the ITC remedy) to ensure that acquirers, and merchants through their contractual relationship, receive better information to understand the fees they are charged. This is to remedy the schemes’ failure to provide sufficient information to acquirers. Pricing governance remedy (the Pricing Governance remedy) to ensure that there is evidence behind pricing decisions, a remedy to the current absence of evidence showing how pricing decisions are made. The deadline for comments on CP25/3 is 13 February 2026.

On 12 December 2025, the European Banking Authority (EBA) published a Final Report on draft regulatory technical standards (RTS) on the treatment of structural foreign exchange (FX) positions under Article 104c of the Capital Requirements Regulation (CRR).The structural FX provision in Article 352 of the CRR has been subject to various interpretations that have led to differences in its application between EU Member States and across institutions. To promote a harmonised approach within the EU, the EBA published in 2020 own-initiative guidelines (EBA/GL/2020/09) on the practical implementation of the ‘structural FX’ provision. Those guidelines are now transposed into the draft RTS set out in the Final Report, following a mandate provided to EBA in the context of the CRR3 legislative process (see Article 104c of CRR as amended by CRR3).Key elements of the draft RTS include: Maximum open position computation: institutions may consider only credit risk own funds requirements when determining the position that neutralises sensitivity to capital ratios, where credit risk is the main driver of ratio variability. Clarifications on risk positions: the RTS provide further guidance on how institutions should remove FX risk positions from own funds requirements. Policies for illiquid currencies:  dedicated provisions are introduced for currencies that are illiquid in the market, including those affected by Union restrictive measures. The draft RTS will be submitted to the European Commission for adoption following which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the EU.

On 12 December 2025, the Council of the EU published its conclusions on simplifying the Union’s financial services regulation.In the conclusions the Council calls on the European Commission to put forward ambitious simplification packages for the EU’s financial services regulation which should include clear priorities and timelines as well as planned initiatives. The Commission is also called on to consider improvements to the mandates of the European Supervisory Authorities (ESAs), including with a view to ensure better reporting and greater accountability towards the co-legislators and to facilitate the ESAs to adhere to the above principles.

Following the announcement by HM Treasury in October that the Government has decided that the Financial Conduct Authority should become the single professional services supervisor for anti-money laundering/ countering the financing of terrorism (see our previous briefing), a Consultation Paper has now been published providing further details of the reform proposals and requesting responses by 24 December 2025. In our latest briefing we set out our key takeaways from the Consultation; the expected timeline for changes; and steps for impacted firms to consider taking now.

On 12 December, the Financial Conduct Authority (FCA) published findings from its multi-firm review of how wholesale banks deliver best execution in UK listed cash equities.BackgroundThe FCA explained that it had last carried out a thematic review (TR14/13) of wholesale banks’ best execution practices in 2014 and that, in the context of regulation, the Markets in Financial Instruments Directive (MiFID II), which came into force in 2018, has extended the best execution rules and regulatory framework for SIs in equities.Key findingsThe FCA highlighted key findings from this review, including: Scope: The FCA received feedback that assessing the scope of best execution obligations in quote-driven wholesale markets, where firms deal on their own account, can be complex, so it will consider this in any future review of our best execution rules. However, in terms of areas for improvement the FCA highlighted that in quote-driven markets, it found some banks inflexible in their best execution framework, but reminded firms that their frameworks should be flexible enough to ensure best execution is applied and evidenced. The FCA reminded firms that they should examine how and when they undertake reviews against their execution outcomes, using a flexible framework allowing easy adaption to market and client activity changes.  Governance and oversight: The FCA found areas for improvement in relation to committee scrutiny, challenge from compliance, the use of framework testing and insufficient data and evidence. The FCA found that at most banks, compliance typically focused on challenging processes rather than actual outcomes, but that it found examples of stronger and effective challenge at banks which had empowered compliance functions, supporting them with the right data and tools, and ensuring their voice was heard at all forums. The FCA also emphasised that banks should fully assessed how effectively their frameworks would operate under varying market conditions and ensure their arrangements are sufficiently tailored to all relevant asset classes so they can demonstrate their delivery of best execution across a range of market conditions and product types.   Monitoring and management information: The FCA made clear that it did not observe the same monitoring issues that were reported in the 2014 review and that in most cases, banks had well-established processes in place that covered a range of execution factors and enabled them to identify both good and bad outcomes. However, the FCA also highlighted some areas for improvement, for example in relation to how the results of the real-time and post-trade monitoring are reported to senior management decision-making forums at some banks. Managing conflicts of interest when internalising order flow: The FCA set out that as operating as a systematic internaliser allows a firm to internalise order flow by matching client orders against its own book it considers that this can create a potential conflict of interest between the firm’s obligation to provide best execution and its incentive to reduce execution costs and capture market share through internalisation. However, it further explained that as internalisation does not automatically guarantee the best execution outcome firms must consider all appropriate execution venues and route orders where they can get the best possible outcome. Next stepsThe FCA set out that it will continue discussions with wholesale banks on their approaches to best execution and that if it considers that proposing rule changes is appropriate, it will consult on those changes in the first half of 2026.

On 11 December 2025, the Financial Conduct Authority (FCA) published a new webpage setting out its expectations of firms promoting investment products, and common misconceptions about risk warnings.BackgroundThe FCA explained that it is currently supporting a review of risk warnings, led by the Investment Association and supported by HM Treasury, and that it is outlining its expectations of firms and some common misunderstandings to support this work.OverviewThe FCA set out certain considerations for firms when promoting investment products, including: Financial promotions likely to be received by retail customers must meet requirements under the Consumer Duty. This means that they must support customer understanding, and be clear, fair and not misleading. When designing communications, firm should put themselves in the consumer’s shoes and think about what they would want or need to know. Where appropriate, this includes testing communications. The FCA also addressed certain misunderstandings about risk warnings, including by clarifying that: The FCA does not prescribe risk wording for mainstream investments. There is no requirement for mainstream investment promotions to include a separate risk warning. They must provide a balanced view of the benefits and risks, to give consumers a fair description of the product or service. The FCA don’t mandate how firms should order their promotions. Firms may order their messaging however best supports consumer understanding.   Firms should put themselves in customer’s shoes and consider how communication’s phrasing as a whole supports’ consumer understanding. Image advertising, such as branding, does not need information about risks. Promotions must be standalone compliant. Firms need to ensure consumers see the right information at the right time, and are equipped to make effective, timely and properly informed decisions. This does not require generic, repeated risk disclosure on every page. Finally, the FCA set out some it’s views on ways to meet the relevant requirements, including: Risk statements:  Firms should ensure that a financial promotion makes it clear if a product or service places a customer’s capital at risk (COBS 4.2.4G(1)). The FCA has seen firms introduce contextualised risk statements that explain both the potential benefits and risks of investing in their promotions and supports this approach. Diminishing or disguising information: Firms should make sure promotions do not disguise, diminish or obscure important information or warnings (COBS 4.5.2R(4) or COBS 4.5A.3R(2)(e)) and must not downplay key information you provide to consumers in a way which could be misleading.  That said, the FCA considered that explaining the potential benefits of a product can be done alongside explaining the risks and doing so doesn’t have to diminish the risks if done fairly, as this can be part of communicating a balanced promotion.   Cash comparisons: When communicating comparative information in relation to investments, firms must make sure that the comparison is meaningful and presented in a fair and balanced way (COBS 4.5.6R or COBS 4.5A.7R).  Firms can compare cash and investment products to help a consumer’s decision-making but must provide balanced information on the features of both, and equip consumers to make effective, timely, and properly informed decisions.

On 12 December 2025, the Basel Committee on Banking Supervision (Basel Committee) and the International Organization of Securities Commissions (IOSCO) published a report that reviews the implementation of margin requirements for non-centrally cleared derivatives. The report concludes that the framework has been effectively implemented and finds no evidence of material issues. As such the Basel Committee and IOSCO do not propose changes to the framework but recommend continued monitoring in the form of supervisory information exchange and the sharing of experiences among their members to address evolving market practices.

On 12 December 2025, the European Central Bank (ECB) announced that it will be assessing 110 directly supervised banks on the management of geopolitical risk.As a key driver of macroeconomic uncertainty, geopolitical risk remains at the centre of the ECB’s supervisory priorities for 2026-28.Reverse geopolitical risk stress testAs part of their 2026 internal capital adequacy assessment process the banks will conduct a reverse geopolitical risk stress test which will assess the extent to which their stress-testing capabilities take geopolitical risks into account. The stress test is intended to provide insights into the geopolitical risk-related scenarios that could materially affect banks, who should identify relevant geopolitical events and quantify their impact. In addition, they will be asked to describe how they would act to reduce that impact, if necessary, with a view to ensuring that they have robust governance and operational resilience frameworks in place.In particular, each bank will identify the most relevant geopolitical risk events that could lead to at least a 300-basis point depletion in its Common Equity Tier 1 capital. In addition to reporting on how the geopolitical risk scenario would affect their solvency positions, banks will also be asked to provide information about how it may affect their liquidity and funding conditions.Next stepsThe main aggregate conclusions of the reverse stress test will be communicated in the summer of 2026.Weaknesses revealed by the reverse geopolitical stress test will feed into the Supervisory Review and Evaluation Process assessment.

On 12 December 2025, the National Audit Office (NAO) released a report which examined how the Bank of England (BoE) managed the Real-Time Gross Settlement (RTGS) renewal programme to achieve a new system resilient to future developments and risks.BackgroundIn 2016, the BoE established the RTGS renewal programme (the programme). In April 2025, it successfully launched the new system. The NAO’s report examines whether the BoE managed the programme effectively and efficiently to achieve a new system resilient to future developments and risks, and whether it has identified wider learning from the programme.Findings and recommendationsOverall, the NAO found the BoE’s management of the programme demonstrated value for money, and good practice in digital transformation, offering lessons for other government projects and the BoE’s wider project management.The NAO sets out certain recommendations to help the BoE maximise the benefits from its management of the renewal programme and implementation of the new RTGS.  The report provides that the BoE should: Identify mechanisms for applying lessons from the programme to its other digital and business transformation projects to secure change, for example updating internal guidance or review processes. Set out clear plans for ensuring the right investment and resourcing at the right time to keep the system up to date (including for wider BoE services that the RTGS relies on). As it manages a more dynamic process of RTGS change, ensure it understands the impact of higher levels of change on all RTGS users, to minimise this where possible. Assess and, where possible, evaluate the effectiveness of potential interventions in widening access and reducing barriers to entry to the RTGS, including the introduction of alternative access routes to Swift, to ensure it puts the optimum mix in place.

On 11 December 2025, the European Systemic Risk Board (ESRB) published a report (dated 31 October 2025)  in which it identifies and lists the tasks assigned to it by EU legislation beyond the ESRB Regulation. It then categorises them from a content point of view, classifying them into four types according to their main purpose. Against this, the General Board of the ESRB has made changes to internal procedures aimed at streamlining the performance of certain ESRB tasks, without amendments to legislation, by adopting Decision ESRB/2025/7. Furthermore, the ESRB has also prepared a proposal for legislative amendments aimed at contributing to the simplification of its tasks, to be considered by the European Commission.

On 11 December 2025, the European Central Bank (ECB) issued a press release announcing that its Governing Council has endorsed the recommendations of its High-Level Task Force on Simplifications.The recommendations include: Reducing the number of elements in the risk-weighted and leverage ratio framework. Introducing a materially simpler prudential regime for smaller banks, which expands on the existing EU regime. Introducing a European governance mechanism that takes a holistic view of the overall level of capital. Finalising the Savings and Investment Union – including completion of the Banking Union – to foster cross-border integration and allow for more efficient capital markets. The ECB will present the proposals to the European Commission, which is preparing a report on the overall situation of the EU banking system that is due to be presented in 2026.