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Regulatory update: Second quarter 2026
The first of our quarterly updates brings you the most significant regulatory developments for financial services, including Consumer Duty enforcement, fair value reviews, disclosure reform, crypto asset regulation, financial crime supervision and broader rule simplification initiatives.
What’s on the Regulatory Agenda?
Q2 2026 has seen the FCA move from consultation into implementation across several major regulatory initiatives.
While Consumer Duty remains the foundation of supervisory activity, the regulator is increasingly focused on how firms demonstrate customer outcomes in practice.
This Quarterly Regulatory Update brings together the most significant developments from across the financial services landscape, including Consumer Duty enforcement, fair value reviews, disclosure reform, cryptoasset regulation, financial crime supervision and broader rule simplification initiatives.
As always, our aim is to equip you with:
- A clear view of the regulatory landscape;
- A practical sense of what firms should prioritise now; and
- An early look at what’s coming next, including a new section on Upcoming Deadlines & Key Dates.
Wealth, Investment & Pensions: Fair Value, Legacy Products & Disclosure Reform
- Unit-Linked Pensions & Savings Review: The FCA has highlighted concerns that customers in legacy pension and savings products often receive poorer value than those in newer products, increasing expectations around fair value assessments, data quality and remediation.
- Simplifying Consumer Investment Disclosures (CP26/24): Proposed reforms would streamline disclosure requirements across MiFID, IDD and non-MiFID business, simplify cost disclosures and remove cumulative effect illustrations.
- AIFM Reform: The FCA's review of the UK AIFM framework signals a move towards a more proportionate, growth-focused regime for alternative investment managers.
Consumer Investments: Advice Reform & Outcome-Focused Regulation
- Advice Guidance Boundary Review: The FCA continues to pursue a more proportionate advice framework, supporting simplified and targeted advice models.
- Consumer Duty Oversight: Greater scrutiny is being applied to customer understanding, product governance and the monitoring of customer outcomes.
- Fair Value Assessments: Firms are expected to demonstrate that charges remain proportionate to benefits delivered across all customer segments.
Digital Assets & Crypto Regulation: From Consultation to Final Rules
- Cryptoasset Regime Finalisation: The FCA has published final rules covering trading platforms, lending, staking, custody, disclosures and market conduct requirements
- Stablecoin Issuance Framework: PS26/10 establishes one of the most comprehensive stablecoin regulatory frameworks globally, covering backing assets, redemption rights and safeguarding requirements.
- Crypto Prudential Framework: New prudential requirements introduce capital, liquidity, risk management and governance obligations that align cryptoasset firms more closely with traditional financial services regulation.
Financial Crime & AML: Stronger Supervision & Greater Accountability
- Insurance Financial Crime Review: The FCA identified strengths across sanctions controls but highlighted continued weaknesses in due diligence, transaction monitoring and governance arrangements.
- Annex 1 & AML Supervision: The regulator is continuing its transition towards more intensive, evidence-based AML supervision, with increasing scrutiny of governance, risk assessments and control effectiveness.
- CDD & Ongoing Monitoring: Recent thematic reviews reinforce the expectation that firms can demonstrate how financial crime controls operate in practice, not simply that policies exist.
Consumer Duty: Moving Beyond Frameworks
- Consumer Duty Enforcement: The FCA now has 11 active investigations involving potential Consumer Duty breaches, reflecting increased regulatory confidence that firms have had sufficient time to embed the regime.
- Price & Value: Fair value remains a central supervisory priority across investments, pensions, insurance and consumer finance.
- Consumer Understanding: Firms are expected to use evidence, testing and management information to demonstrate customer comprehension rather than relying solely on compliant wording.
Enforcement and Governance: A More Interventionist FCA
- Enforcement Watch 2: The FCA has provided its clearest indication yet that serious Consumer Duty concerns may increasingly progress from supervisory intervention into formal enforcement investigations.
- Early Intervention Strategy: Voluntary requirements, skilled person reviews and thematic supervision continue to play a central role, but firms should expect escalation where evidence of customer harm persists.
- Governance Expectations: Accountability, management information and the ability to evidence decisions remain central to the regulator's approach across all sectors.
How we can assist
At S&W, we understand the complexity and nuance of these changes. Whether you're looking to proactively assess your firm’s cultural health, update your conduct frameworks, or navigate evolving Financial Crime regulations, we have an experienced team who have worked together for years to serve the needs of our clients. We can give you the best possible chance of mitigating and minimising the impact of any potential supervisory action where appropriate
