General regulatory update – FCA regulatory priorities, Appointed Representatives regime and Buy Now Pay Later

This March 2026 financial services regulatory update covers the FCA’s new Regulatory Priorities reports, HM Treasury’s consultation on the Appointed Representatives regime, and the FCA’s final rules for Buy Now Pay Later regulation from 15 July 2026, alongside key developments on cryptoassets, consumer duty, AI, securitisation and capital requirements in the UK.

Read other sections from our financial institutions newsletter:

• Enforcement & litigation update

FCA Regulatory Priorities reports

Consumer investments

The FCA has started publishing Regulatory Priorities reports, which replace the old Portfolio Letters. There will be nine annual reports, which will set out specific key priorities for each sector, and relevant work that the FCA will be undertaking in that sector.

On 4 March the FCA published the Regulatory Priorities report for Consumer Investments. Key points are:

• The FCA wants firms to do more to provide information to consumers online, noting that its research showed around a fifth of consumers had been using social media to research investing.
• The FCA reminds firms that in 2025 they made what they refer to as the most significant policy changes to the retail investments landscape for a generation, including the new regimes for targeted support and CCIs, which come into effect in April.
• The FCA is progressing its review of model portfolio service (MPS) providers, including looking at whether the Consumer Duty requirements are still appropriate. They remind MPS firms that they must be offering fair value and providing a good service, including prompt transfer times.
• The FCA will be:
  • consulting on simplifying and consolidating its investment advice rules and guidance by the summer;
  • reviewing rules and guidance relating to financial promotions;
  • consulting on clarifications to the application of the Consumer Duty across distribution chains;
  • publishing further guidance for 'finfluencers', reminding them to ensure their promotions are accurate and responsible; and
  • consulting on new rules for SIPP providers focusing on operators' due diligence obligations, and the handling of pension scheme money and assets, further to their Discussion Paper from 2024 on pensions.

The report helpfully provides links to relevant publications including policy documents and multi-firm reviews, and a timeline for forthcoming regulatory developments.

Retail banking sector update

On 12 March the FCA published the Regulatory Priorities Report for Retail banking

 The FCA sets out its four main priorities for the year:

• Access to cash and essential banking services (including monitoring branch closures).
• Good outcomes from products and services.
• Fighting fraud and other financial crime.
• Operational resilience and data security.

The FCA will also be focusing on business banking outcomes, innovation in retail banking (including open banking and stablecoin), and the motor finance commission review.

As with the consumer investments report, this report lists key publications and provides a helpful indicative timeline for regulatory publications due this year.

Mortgages: key priorities

On 12 March 2026 the FCA also published its Regulatory Priorities Report for Mortgages. The FCA's key priorities in this sector are:

• Improving consumer outcomes under the Mortgage Rule Review, including consulting on potential mortgage rule changes.
• Encouraging responsible lending and supporting mortgage borrowers in financial difficulty.
• Ensuring the quality of advice, including following up on the findings of their review of second-charge mortgages, also published on the same day, which will include requiring some firms to take remedial action.

As well as their work on the Mortgage Rule Review and targeted supervision, the FCA will also be:

• Undertaking a market study on later life lending.
• Considering policy changes to support consumers consolidating debt.
• Encouraging firms to experiment with AI, and consider its opportunities and risks.

The report also includes links to key publications, along with a detailed timeline that is particularly helpful in setting out the next steps in the Mortgage Rule Review.

Consumer duty: board reports update

On 24 February 2026, the FCA updated its Consumer Duty webpage providing examples of good and bad practice for consumer duty board reports to provide guidance on how smaller firms can meet its requirements.

ETFs

Appointed representatives regime consultation

On Thursday 12 February the Treasury published a consultation on its proposed reform to the Appointed Representatives regime, following on from the Policy Paper published in August 2025. The current consultation expands on the proposals set out in the Policy Paper. The government considers that there is a regulatory gap in the current framework, in that firms can act as principals and appoint ARs with no extra authorisation needed to do so.

The government is proposing as follows:

• There will be a new permission for acting as a principal – authorised firms will no longer be able to appoint representatives without being specifically authorised to do so. This will require an amendment to FSMA 2000. This will allow the FCA to ensure that prospective principal firms have the necessary expertise, resources and systems in place to provide effective oversight of ARs, and to vary or withdraw a permission if necessary.
• In good news for current principals, they will not need to apply for the new permission and will be deemed to be already authorised. However, the FCA will be able to vary or withdraw their deemed permission, and it might be limited to just introducing activities.
• Consumers will be able to refer complaints to the FOS if they are unable to resolve a dispute with an AR for which the principal firm was not responsible.
• To bring ARs within scope of the SM&CR. The Government is concerned that there is an inconsistent approach to conduct rules, as ARs are still subject to the old, approved persons regime. They are therefore proposing that ARs will be brought into the new proposed framework for SM&CR, currently being finalised with the FCA.
• The consultation closes on 9 April 2026. Given that some of the proposed changes require primary legislation, it seems unlikely that the changes will come in soon.

At the time of writing, we are still awaiting the Supreme Court's judgment in the case of Kession Capital Ltd, which was heard last July.

Cryptoasset regulation: update

On 23 January 2026 the FCA published its latest consultation on rules for the new cryptoasset regime coming into force next year.

It covers areas including:

• How the Consumer Duty will apply to cryptoasset firms. The FCA is separately consulting on  further non-handbook guidance on the application of the Consumer Duty.
• The application of various parts of COBS to cryptoassets.
• The use of credit to purchase cryptoassets.
• The application of cryptoasset safeguarding rules to firms which are conducting more than one regulated cryptoasset activity.
• The proposed approach to specified investment cryptoasset custody.
• Location policy guidance for cryptoasset firms – relating to the treatment of international firms.

On 4 February the Government published the latest piece of cryptoasset legislation, the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, which mostly come into force on 25 October 2027, the day the regime is expected to come into force, except for the parts which provide the FCA with powers to make rules and authorise firms, which are now in force. This piece of legislation provides for the new designated activities relating to offering qualifying cryptoassets to public trading, and creating a market abuse regime.

The FCA has announced that the authorisation gateway for firms that want to undertake the new regulated activities relating to cryptoassets will be open from 30 September 2026 until 28 February 2027.

Buy Now Pay Later

On 11 February 2026 the FCA published its Policy Statement and final rules for the regulation of Deferred Payment Credit (DPC) (also known as Buy Now Pay Later). The new rules come into force on 15 July 2026.

From July, firms which offer a DPC agreement to finance a purchase of goods and services will need to apply for FCA authorisation. A Temporary Permissions Regime will commence on 15 May for firms which do not currently hold the required consumer credit permissions.

It is worth noting that the new rules only apply to third party providers, so retailers which provide their own facilities to pay by instalments will not be within scope and will not need to be authorised. Broking a DPC agreement is also out of scope.

AI in financial services

The FCA is conducting a review into the potential long-term impact of AI on financial services. The review is split into four themes:

• Future evolution of AI technology
• Future impact of AI on markets and firms
• Future consumer trends
• Future regulatory approach

With regards to the FCA's future regulatory approach, it has been seeking feedback on the questions from industry and other stakeholders relating to the application of an outcomes-based approach to retail regulation in an AI-enabled FS industry, its supervisory and enforcement approach, and how it can support growth and competitiveness in this area.

The review closed on Tuesday 24 February and the FCA will report back in due course.

New rules relating to securitisation

The FCA published Consultation Paper CP26/6 on its proposed rules for reforming the UK Securitisation Framework.

The FCA wants to simplify the regime and is consulting on proposals to:

• Simplify due diligence requirements, moving to a more risk-based approach.
• Streamline transparency requirements.

The FCA has worked with the PRA which published a parallel consultation paper with proposals for dual-regulated firms.

The Treasury intends to lay before Parliament a statutory instrument which will amend relevant parts of the UK SR 2024 in due course.

Capital requirements

On 20 January the PRA published its policy statement and final rules relating to its implementation of the Basel 3.1 standards. The PRA has generally not made substantive changes to its near-final rules which it published last year.

On the same day HM Treasury published the legislation to revoke the relevant parts of the assimilated EU law Capital Requirements rules.

The Basel 3.1 policy, rules, supervisory statements, and statements of policy will take effect on Friday 1 January 2027. The internal model approach for market risk will come into effect on Saturday 1 January 2028.

As part of the government's longer term aims to apply the FSMA model of regulation to all assimilated law, in February HM Treasury published a response to its consultation on its plans to replace UK CRR with PRA rules, supervisory statements and statements of policy. This is very much an ongoing project.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2026