10 financial regulatory changes for 2026

2025 has brought the financially regulated community many gifts in the form of promised reforms. Changes in policy, regulatory strategies and priorities, newly regulated activities that will bring more firms within the regulatory perimeter, overhaul of more rules assimilated from the EU after Brexit, and changes specific to particular sectors, we've seen it all. The challenge for firms now is to plan how to deal with the changes and challenges that 2026 will bring.

In this article (first published in Law360), we look at the detail of five changes which we know are coming at set dates next year, and highlight five others which are still being developed, but which we expect to progress significantly during 2026.

Targeted support: April 2026

In July 2025, HM Treasury proposed a new regime for targeted support. This service would be a standalone "regulated activity" under the Financial Services and Markets Act 2000 (FSMA) made possible by changes to the FSMA (Regulated Activities) Order 2001 (RAO). Giving investment advice is a well established regulated activity, but as part of the Government's drive to encourage consumers to put their money in investments rather than cash savings, it wants to make it easier for firms to give support designed for certain groups of consumers, without needing to comply with all the nuanced rules for fully personalised recommendations. The plans are part of the wider review on the boundary between financial advice and guidance, and seek to find a middle ground so that firms can provide consumers with more than mere information, but with something falling short of full-blown tailored advice, so consumers will not incur the more significant costs that a full investment advisory relationship would entail.

Currently, the legislation to introduce the new activity is still in draft, but the FCA has confirmed the form of the rules it will make as soon as legislation permits, and that it is ready for the planned April 2026 start date.

Consumer Composite Investments: April 2026

Also in April, the new UK "Consumer Composite Investments" (CCI) regime begins to take effect. This regime also goes alongside the work on the advice-guidance boundary and replaces the unpopular "PRIIPs" regime, which was an EU measure designed to set a standard form of disclosures for retail investment products, and also the UCITS disclosure requirements for retail investment funds. Consumers did not find the information useful or easy to understand when presented in the prescribed format, so the Government has legislated to change this.

A CCI is any investment where the returns are dependent on the performance of, or changes in, the value of underlying or reference assets, so will include all types of fund, insurance based investment products, structured products and deposits and derivatives and similar products. The UK's new CCI regime will replace the former prescriptive regime with a regime that gives product manufacturers and distributors more flexibility on how they present their customer communications. The rules require some key metrics to be included so that consumers can compare products, but otherwise allow firms to decide what they think works best – but of course always bearing in mind the overarching Consumer Duty outcomes, which require firms to act to deliver good outcomes for retail customers (FCA Principle 12). The FCA's immediate focus for this purpose is on the "consumer understanding" outcome. To comply with the FCA's expectations under this outcome, firms need to ensure they give consumers the information they need, at the right time, and presented in a way they can understand. Of course product design and its value are also critical, but the CCI regime differs from the PRIIPs one predominantly in allowing firms to decide for themselves how they can most usefully present information and in doing so meet the consumer understanding outcome. Firms can start to comply with the new requirements instead of the old ones from 6 April 2026, and must do so by 8 June 2027.

Payment safeguarding: May 2026

In May 2026, changes to the requirements on e-money and payments firms take effect. The Financial Conduct Authority (FCA) had long been concerned that the safeguarding requirements that govern how funds belonging to customers are protected while in possession of the firm were not robust enough. Ideally, it wanted to move these firms to a style of protection similar to that it requires from investment firms, but proposed to do it gradually. For now, it is introducing a few changes to bolster the current regime, and will adopt a wait and see attitude on making further change.

But even these lesser changes will need time to implement, so affected firms should already we well advanced on their planning. The main changes require firms to:

• Put in place appropriate organisational arrangements to allocate and safeguard all so-called "relevant funds" properly and keep records
• Allocate oversight of safeguarding arrangements to a named senior manager
• Produce resolution packs including details of all arrangements with third parties, reconciliations and records
• Ensure all appropriate due diligence is carried out on third party suppliers, and that the required letters from those suppliers acknowledging the nature of the safeguarding accounts the provide contain all necessary up to date contact details, and
• Arrange (in most cases) for an annual external audit of safeguarding requirements, and for the auditor to complete a report in required form.

Buy-Now-Pay-Later regulation: July 2026

From July 2026, "deferred payment credit" (DPC) agreements will come within the scope of as changes to the RAO take effect. Most people would call DPC "buy-now-pay-later" or BNPL, but actually DPC products are a narrow subset of BNPL. Some BNPL products and those who sell them are already regulated under the well established consumer credit regime as "regulated credit agreements" (RCA), but certain DPC products that have previously benefited from exemptions from the RCA definition will now become regulated in their own right.

Broadly, a DPC is an interest free loan, repayable in 12 or fewer instalments over the course of 12 months. These products are popularly used by retailers and currently benefit from an exemption with in article 60F of the RAO, such that those who provide or broke them fall outside the need for authorisation under FSMA to do so. From July, where this type of loan is made by a third party lender, then that lending will become regulated. Loans provided by the merchants themselves will remain outside the scope of regulation. In theory, those who make referrals or arrangements for third-party lenders to provide DPC finance will also need to be regulated, but there will be an exemption for those who make these arrangements for credit on their own products.

So who will this affect? Not only established lenders, who will in the main already be authorised, but will need to seek a variation of their regulatory permissions, but also some others, who may or may not have been intended to be caught. Particularly, if one company within a group offers DPC to customers of other group companies, then that lending entity will fall within scope.

Non-financial misconduct rule extension: September 2026

Banks have been subject to rules on non-financial misconduct (NFM) for some time. In July 2025, the FCA confirmed that, although it was not taking forward many of the proposals it had made for a new regulatory framework for Diversity and Inclusion in the financial sector, it was extending the rules on NFM to all firms. The changes mean that, from 1 September 2026, certain types of serious misconduct, specifically bullying, harassment and violence will fall within the Code of Conduct (COCON), so that engaging in those behaviours can amount to a breach of FCA Rules when engaged in against any colleague by any staff member subject to COCON and in connection with their work – and not just functions that are FSMA regulated activities. The FCA has published a number of helpful flowcharts and guidance to show how and when the new requirements will apply.

Other changes coming in 2026

We have discussed a selection of developments for which we have definitive dates in 2026. There are many others that are almost certain to happen in 2026, but we are waiting for final laws or rules in order to put a firm date on them. These include:

• Updates to the anti-money laundering regulatory regime, including changes to bring supervision of professional services firms within the FCA's remit;
• Confirmation not only of whether the FCA will implement a redress scheme for motor finance commission but also of reform to the way the redress system as a whole operates
• Changes to the Senior Managers and Certification Regime expected to take effect in mid-2026, most likely to remove the certification regime from legislation and replace it with a more flexible regime run by the financial regulators, and possibly we will also see a reduction in the number of "senior management functions" that require regulatory approval
• Significant reform of the consumer mortgage regime, with targeted reforms aimed at helping more consumers buy homes and proposals specific to later life lending due to be finalised by the end of the year, and
• The launch of a "provisional licence" regime to help certain start up firms start to operate in a controlled regulatory environment with a permission that lasts for a limited time while they seek full authorisation. This initiative is part of the growth agenda and is intended to allow suitable firms to seek funding and start to grow their business.

And throughout 2026, the FCA will continue its overall review of its rulebook to remove any unnecessary, duplicative or unnecessarily burdensome rules, as it continues to rely on the Consumer Duty to drive firms' behaviour, while the Government will steadily progress the many initiatives announced as part of the Leeds Reforms.

What does this mean for lawyers?

So we can see it's going to be a busy year of regulatory change, and that we have varying degrees of certainty about what is happening and when. And the varied nature of the changes means that some will be of wider relevance than others. But what regulated firms and their lawyers should focus on is identifying the changes that matter to specific businesses and business lines, and planning timelines for implementation. In some cases this will mean a gap analysis followed by targeted change, in others it will mean planning how new requirements can properly be embedded within established practices and policies. Sometimes it will involve building in the time for discussions with business partners, suppliers or other third parties who are involved in the part of the business that needs to make changes. The best advice is to identify the changes that are most relevant, and plan a timeline for addressing them.