Financial Services SpeedRead: 23 April 2026 edition

Welcome to the latest edition of the Financial Services SpeedRead, a collection of bite-sized updates designed to help you keep on top of key regulatory developments in financial services over the preceding fortnight. Please get in touch if you want to explore any of the topics covered in this fortnight's edition of Financial Services SpeedRead in more detail.

Financial Markets

1. FCA publishes policy statement on changes to the UK short selling regime

On 16 April 2026, the FCA published a policy statement setting out its final rules and guidance relating to the new short selling regime set out in the Short Selling Regulations 2025. The intention of the changes is to remove disproportionate burdens on firms without fundamentally altering the existing framework.

Following feedback to its consultation paper in October 2025 (CP25/29), the FCA has confirmed the following key changes to the short selling rules:

• the position reporting deadline is extended to 23:59 on the working day following the day on which the reporting obligation is triggered;
• the market maker exemption is streamlined to a single activity-based notification, removing the requirement to notify individual financial instruments, with market makers instead providing an annual attestation;
• a new reportable shares list replaces the current list of exempt shares, identifying shares admitted to trading on UK trading venues that are subject to the short selling rules;
• the FCA will publish anonymous aggregate net short positions by company, aggregating individual positions reported at or above the 0.2% threshold, from 13 July 2026; and
• UK sovereign credit default swaps are removed from the scope of position reporting and covering requirements, although they remain within scope of the FCA's emergency powers.

The new regime is coming into force in two phases – Phase 1 on 13 July 2026, with further rules implemented on 30 November 2026 for Phase 2. Further detail on the new regime is also provided in the FCA's Operational Guide.

2. EU Commission adopts delegated regulation setting regulatory technical standards on order execution policies

On 14 April 2026, the EU Commission adopted a delegated regulation supplementing MiFID, setting regulatory technical standards (RTS) investment firms to establish and assess the effectiveness of their order execution policies.

The RTS relate to (among other things): (i) the requirement for firms to establish internal governance procedures for selecting execution venues; (ii) arrangements for monitoring execution quality using reference data (including from consolidated tape providers, where available); and (iii) the criteria for order routing. Additional requirements relate to the handling of specific client instructions, dealing on own account when executing client orders, and an annual requirement to assess the effectiveness of order execution policies.

The delegated regulation will enter into force on the 20th day following publication in the Official Journal of the EU, and will become applicable 18 months after entry into force, to allow firms to adjust their policies to be compliant with the requirements.

3. FCA publishes Primary Market Bulletin 62 on Carillion enforcement action and market integrity

On 8 April 2026, the FCA published Primary Market Bulletin 62 (PMB 62) which addresses various topics including: (i) the FCA's enforcement action against Carillion plc (Carillion); (ii) the regulator's concerns on potentially manipulative investment approaches; (iii) the FCA review of sponsors' work regarding the modified transfer process; and (iv) the consultation deadline for amendments to the Prospectus Rules.

Misleading statements by Carillion

• In February 2026, the FCA publicly censured Carillion and fined three of its former directors for publishing misleading information about the firm's financial performance, in breach of Article 15 of the Market Abuse Regulation.
• The FCA further found that Carillion's systems and controls were insufficient to ensure that accounting judgements made were appropriately made, recorded and reported to the Board and Audit Committee. The three directors were found to be knowingly concerned in Carillion's breaches.
• In PMB 62, the FCA sets out the key elements of the case which were found to constitute market manipulation, and elements which indicate that the firm and its directors ought to have known the statements were false or misleading.

Manipulative investment approaches

• The FCA highlights concern that UK micro-cap or small-cap issuers are being directly targeted under potentially manipulative schemes to affect issuer share prices. These include equity fundraising linked to pump-and-dump schemes, and fake investor takeover approaches.
• The FCA emphasises that directors of listed companies should carry out appropriate due diligence before engaging with any proposals received.

The FCA also sets out common themes from its review of sponsors that had worked on modified transfers into the equity shares (commercial companies) (ESCC) category. Finally, it reminds firms that the deadline for commenting on the FCA's proposed amendments to the prospectus rules is 20 April.

Banking and Prudential

4. EBA publishes report on banks' dry run testing of recovery plans

On 13 April 2026, the EBA published a report providing a comparative analysis of how banks test the implementation of their recovery plans through dry run exercises. The report forms part of the EBA's supervisory convergence priorities for 2026 and reflects its broader mandate under the Bank Recovery and Resolution Directive to contribute to effective recovery and resolution planning.

The report highlights the following key findings and observed practices:

• most institutions recognise the value of dry runs, but approaches and maturity levels vary significantly across institutions;
• where dry runs are conducted primarily to meet supervisory expectations, they tend to resemble compliance exercises with limited insights and follow-up actions;
• institutions with more advanced practices treat dry runs as genuine managerial tools, embedding recovery planning within the broader risk management framework; and
• effective dry runs are typically driven by a multi-year roadmap aimed at progressively covering the various components of the recovery plan, with clear objectives set ex ante.

Fund Management

5. FCA publishes good and poor practice on asset management applications for authorisation

On 9 April 2026, the FCA published good and poor practice guidance aimed at improving applications for authorisation from firms seeking to operate in the UK asset management sector. The guidance is based on a review of 292 applications determined between September 2024 and September 2025, of which 14% were withdrawn or rejected due to poor-quality or incomplete information. The guidance sets out that:

• firms must demonstrate that day-to-day management decisions are taken in the UK by senior individuals with the right to work in the UK;
• firms that outsource activities to third parties remain accountable for compliance with outsourcing obligations, and must have appropriate oversight arrangements in place to ensure such compliance;
• firms dealing with retail clients should clearly articulate how they apply the Consumer Duty across all four outcomes; and
• fund documentation must be of sufficient quality and detail, with proposed fees consistent with any financial projections provided.

The FCA reminded firms considering an application that they can submit a request for guidance to the FCA's pre-application support service.

Senior Managers and Governance

No recent updates.

Financial Crime

6. AMLA consults on group-wide AML / CFT requirements and business-wide risk assessment

On 17 April 2026, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) launched two public consultations – the first relating to draft regulatory technical standards (RTS) on group-wide requirements, and the other on draft guidelines for business-wide risk assessments – both under the new EU AML rules (Regulation (EU) 2024/1624).

Key points addressed in the consultations include the following:

• The draft RTS set minimum standards for group-wide AML / CFT frameworks, including information-sharing requirements and additional measures for branches or subsidiaries in third countries.
• The draft RTS extend group-wide requirements to structures such as networks, partnerships and franchises sharing common ownership, management or compliance controls.
• The draft guidelines establish four minimum requirements for business-wide risk assessments.
• Both instruments emphasise proportionality based on entity size, business model and risk profile.

The consultation on the draft RTS closes on 15 June 2026 and the consultation on the draft guidelines closes on 15 July 2026, with final guidelines expected in Q4 2026.

7. FCA publishes findings on firms' customer due diligence processes and controls

On 8 April 2026, the FCA published its findings from a multi-firm review of customer due diligence (CDD), enhanced due diligence (EDD) and ongoing due diligence controls across several firm types. The review, conducted in 2025 as part of the FCA's financial crime supervisory programme, assessed firms' controls against the various financial crime regulations, rules and guidance.

Key findings from the review include:

• several firms lacked sufficient detail in their policies and procedures, including on alternative methods of identity verification and the frequency of periodic customer reviews;
• some firms failed to document EDD measures taken for high-risk customers or to record the purpose and intended nature of the business relationship; and
• in certain cases, there was no independent second line assurance, with the same staff responsible for both customer onboarding and review.

The FCA is working with firms where it identified weaknesses and will continue to monitor CDD controls through its supervisory work.

8. EU Commission adopts delegated regulations on inside information disclosure and market abuse under the Listing Act

On 8 April 2026, the EU Commission adopted two delegated regulations supplementing and amending the Market Abuse Regulation (MAR), following changes introduced by the Listing Act (Regulation (EU) 2024/2809). The first regulation concerns the disclosure of information in protracted processes and delay of disclosure, whilst the second regulation concerns trading during closed periods, designated trading venues and the indicators of market manipulation. The Listing Act aimed to reduce administrative burdens for EU issuers while safeguarding market integrity.

The delegated regulations introduce the following key changes to the EU's market abuse framework:

• a non-exhaustive list of final events in protracted processes requiring disclosure of inside information, covering areas such as business strategy, capital structure, corporate governance, and credit institution resolution; and a list of situations where delayed disclosure conflicts with an issuer's previous public announcements;
• an extension of closed period trading exemptions for persons discharging managerial responsibilities to financial instruments beyond shares;
• designation of certain trading venues with significant cross-border dimension for the order data exchange mechanism under Article 25a of MAR; and
• updated market manipulation indicators reflecting algorithmic trading techniques and varying timeframes.

The delegated regulation relating to disclosures is due to enter into force three days after its publication in the Official Journal of the European Union. The delegated Regulation relating to trading is due to enter into force 20 days after its publication in the Official Journal of the European Union.

For further information on changes made by the EU Listing Act, including in relation to market abuse, please see our briefing here.

Retail Services

9. Investment Association publishes final report and guidance on investment risk warnings

On 9 April 2026, the Investment Association (IA) published a final report from its Risk Warnings Review, entitled "Supporting a New Retail Investment Culture", together with practical guidance for firms on investment risk communication. Commissioned by the Chancellor as part of the Leeds Reforms, the Review examines how investment risk is communicated to consumers and recommends a shift away from standardised, loss-focused warnings towards clearer, contextual explanations of risk and reward.

The report finds that current standard phrases such as "capital at risk" are widely misunderstood, frequently ignored and can deter consumers from engaging with long-term investing. Instead, short, balanced and plain language explanations that set out how investments can rise and fall, alongside potential benefits and typical time horizons, are more likely to be understood and trusted by consumers.

At a policy level, the report recommends:

• amending FCA financial promotion rules in COBS 4 to support clearer, contextual explanations of how investment risk works in practice;
• reforming the standalone compliance principle to enable proportionate, journey-wide risk disclosure rather than formulaic repetition on every document; and
• ensuring consistent application of expectations across supervision, enforcement and FOS decisions, supported by ongoing collaboration between industry and regulators.

Alongside the report, the IA has issued practical guidance for firms which sets out a Consumer Duty-led interpretation of existing rules, particularly COBS 4, to help firms improve risk communication within the current framework.

Key points in the guidance include:

• clarifying that COBS 4.2.4G is guidance, not a rule, and that firms do not need to default to the phrase "capital at risk" if they instead provide clear, contextual explanations of the risk of loss;
• encouraging firms to integrate balanced risk information into the natural flow of communications and tailor it to different stages of the consumer journey;
• introducing a RAG rated "risk explanation ladder" to classify types of communication by the level of risk information required; and
• emphasising that risk messages should be proportionate to the materiality of the risk, credible, and designed to support consumer understanding.

An Implementation Forum will be established, with FCA participation, to share practical experience and monitor how the guidance is applied in practice.

Digital Finance and Fintech

10. FCA publishes roadmap on the development of open finance

On 14 April 2026, the FCA published a document setting out its roadmap for the development of open finance up to 2030.

The roadmap seeks to build upon the FCA's progress in open banking, and outlines a phased approach to extending secure data sharing across a wider range of financial products and services. The FCA will focus on how open finance can improve lending for small and medium-sized enterprises and consumers' access to mortgages.

Key points in the roadmap include:

• in 2026, the FCA will collaborate with industry and consumer groups to prioritise high-impact use cases through its Smart Data Accelerator;
• a discussion paper on the first open finance scheme will be published in Q4 2026;
• from 2027, the FCA will work with HM Treasury on options for a long-term regulatory framework for open finance; and
• from 2028 to 2030, the FCA aims to launch open finance schemes with clear governance and consumer protection standards.

Payments

No recent updates.

ESG

No recent updates.

Other

No recent updates.