Legal development

Financial Services SpeedRead: 24 February 2026 edition

26 February 2026

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. ESMA publishes consultation on revised MAR guidelines for delayed disclosure of inside information

On 19 February 2026, ESMA published a consultation paper proposing amendments to its Market Abuse Regulation (MAR) Guidelines on the delay in the disclosure of inside information (the Guidelines). The proposals align the Guidelines with the Listing Act's amended disclosure regime, reducing administrative burdens for issuers while providing clearer requirements.

Under the Listing Act, from 5 June 2026, issuers will no longer need to immediately disclose inside information related to protracted processes before their completion. ESMA is therefore proposing to remove from the current Guidelines the legitimate interests for delayed disclosure connected to such protracted processes.

The consultation paper also identifies additional legitimate interest for delaying disclosure, including where:

a public authority requests non-disclosure of inside information;
the issuer requires more time to collect information; or
the issuer is involved in several procurement processes for similar contracts.

ESMA also proposes to eliminate the section about the "no misleading the public" condition for delay, as the Listing Act removed it from MAR. Instead, the Listing Act requires that a delayed disclosure must not contradict the issuer's latest public announcement on the same matter.

The consultation paper closes on 29 April 2026. A final version of ESMA's Guidelines is expected to be published in Q4 2026.

Banking and Prudential

2. HMT publishes response on applying the FSMA 2000 model to the UK Capital Requirements Regulation

On 19 February 2026, HMT published a policy update response on applying the FSMA 2000 model of regulation to the UK Capital Requirements Regulation (UK CRR). The response followed an 11-week consultation launched at Mansion House 2025. On the same date, HMT also published the draft Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 (OPRR).

HMT's responses covered the following four themes:

Basel 3.1: HMT has committed to co-ordinating all workstreams applying the FSMA 2000 model to UK CRR and clearly communicating key milestones to firms;
Covered Bonds: HMT agreed that appropriate prudential treatment of overseas covered bonds is important for the safety, soundness and competitiveness of UK financial services. Regarding the categorisation of covered bonds for liquidity purposes, firms will continue to be able to use certain non-UK covered bonds to meet their Liquidity Coverage Ratio (LCR) requirements, within the criteria specified in PRA rules. For capital purposes, HMT and the PRA will collaborate to determine the most appropriate treatment. To support this, HMT intends to introduce a power to designate jurisdictions through the OPRR for overseas covered bonds;
Exchanges: HMT considers that the risk-weights for unrated institutions will depend on the nature of the underlying exposures and that the relevant requirements will be set in the PRA Rulebook. Further, rather than publishing a list of exchanges where overseas regulators permit exposures to be treated as exposures to institutions, HMT considers it more flexible and proportionate to allow firms to complete their own assessments; and
Key UK CRR definitions: HMT does not intend to amend the draft Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026 (UK CRR Definitions Regulations) as published in July 2025, but will provide additional clarity to industry on its contents.

The consultation for technical comments on the draft OPRR regulations closes on 2 April 2026. HMT will lay the Capital Requirements Regulation (Amendment) Regulations 2025 and the UK CRR Definitions Regulations in early 2026.

The implementation of Basel 3.1 will occur on 1 January 2027.

3. PRA publishes consultation on rule changes to accommodate HMT's Overseas Prudential Requirements Regime

On 19 February 2026, the PRA published a consultation paper (CP3/26), setting out proposed amendments to the PRA Rulebook to reflect the implementation of HMT's intended Overseas Prudential Requirements Regime (OPRR). On the same date, HMT also published the draft Overseas Prudential Requirements Regime (Credit Institutions and Investment Firms) Regulations 2026 (see entry above). The OPRR restates, with modifications, existing Capital Requirements Regulation (CRR) equivalence provisions in legislation.

The proposals aim to ensure the PRA Rulebook remains aligned with HMT's reforms to the UK's approach to recognising other jurisdictions' regulatory frameworks. Key areas addressed include the credit risk designation regimes governing the treatment of various exposures, including exposures to institutions; exposures in the form of eligible covered bonds; exposures to central governments or central banks, regional governments or local authorities, and public sector entities; and exposures to Gibraltarian entities. The consultation paper also considers the rules regarding large exposures.

The PRA proposes that changes resulting from this consultation paper would become effective alongside the Basel 3.1 package on 1 January 2027. The consultation closes on 2 April 2026.

Senior Managers and Governance

4. HMT consults on reforms to appointed representatives regime

On 12 February 2026, HMT published a consultation setting out proposed reforms to the UK's appointed representatives (ARs) regime. The consultation follows an August 2025 policy statement and review of responses to a December 2021 call for evidence on the regime. The proposed changes aim to enhance consumer protection whilst preserving the regime's benefits for innovation, competition and economic growth.

The targeted reforms proposed in the consultation are to:

require authorised firms wishing to use ARs to first obtain permission from the FCA, enabling the FCA to ensure firms have appropriate expertise and resources to oversee their ARs effectively;
enable consumers to take a complaint to the FOS where they cannot resolve a dispute involving an AR and the authorised firm is not responsible for the issue; and
rationalise the conduct and fitness & propriety frameworks applying to an AR, aligning them more closely with those for authorised firms and empowering the FCA to reduce the administrative burdens.

The new AR permission gateway would not require existing principal firms to apply for the new permission, although some existing principals may be limited to appointing Introducer ARs only. For new firms, the principal permission would be embedded in the Part 4A of FSMA 2000 authorisation process, removing the need for a separate application where a new firm seeks permission to act as principal from the outset of authorisation.

The consultation closes on 9 April 2026.

Financial Crime

5. OFSI publishes updated guidance on financial sanctions enforcement and monetary penalties

On 9 February 2026, the Office of Financial Sanctions Implementation (OFSI) published updated guidance on financial sanctions enforcement and monetary penalties. The revised guidance follows a public consultation conducted between July and October 2025, and introduces significant enhancements to OFSI's civil enforcement framework.

The updated guidance introduces several new mechanisms designed to expedite investigations and incentivise co-operation. The key changes to the guidance include:

Early Account Scheme (EAS): a new section on the EAS, which enables subjects to provide an early factual account of a case for up to a 20% monetary penalty reduction;
Case Assessment: a revised case assessment framework to provide a clearer classification of breaches through a four‑level seriousness model;
Monetary Penalty Processes: an updated methodology for calculating monetary penalties to incorporate the new voluntary disclosure and co-operation discount (up to 30%), the Settlement Scheme discount (20%), and the EAS discount (up to 20%);
Settlement Scheme: a new section on the 'Settlement Scheme', explaining how it operates, the discount available, and how it applies to transitional cases;
Financial Hardship: a new policy explaining how OFSI will consider claims of financial hardship in exceptional circumstances; and
Fixed Monetary Penalties: a new section on how the £5,000 and £10,000 fixed monetary penalties for information, reporting and licensing offences will be implemented. An expanded explanation of information offences has also been added.

OFSI will as a matter of policy assess all breaches of financial sanctions in line with the enforcement guidance in effect at the time of making its first formal decision on whether to take enforcement action. Consequently, OFSI's Settlement Scheme will apply to cases where OFSI had not already informed the subject of its intention to impose a monetary penalty (known as a notice of intention) before 9 February 2026.

Retail Services

6. FCA publishes policy statement on Buy Now Pay Later regulation

On 11 February 2026, the FCA published its final policy statement (PS26/1) setting out the regulatory framework for Deferred Payment Credit (DPC), also known as Buy Now Pay Later (BNPL). The statement follows the public consultation published on 18 July 2025 (CP25/23) and facilitates the introduction of BNPL into the regulatory perimeter.

In the policy statement, the FCA confirmed that it will:

Existing Conduct Rules: apply most of the existing conduct rules and guidance in the Consumer Credit Sourcebook (CONC) to DPC;
Pre-Contract Product Information: introduce new rules for DPC lenders to provide product information to a borrower before they enter a DPC agreement, including 'key product information' most important to their decision making;
Consumer Duty: prepare new guidance reminding firms of their obligations under the Consumer Duty;
Missed Repayments: put in place new rules requiring firms to provide information to DPC borrowers who have missed a repayment, and to give notice to the customer before taking certain action. This includes a requirement for DPC lenders to provide information about free debt advice in certain circumstances; and
Creditworthiness Assessments: apply existing creditworthiness rules to DPC lending, including to agreements of less than £50.

DPC will become regulated in accordance with the relevant legislation on 15 July 2026. Any firms undertaking DPC activity that do not currently hold the necessary consumer credit permissions will need to register for the Temporary Permissions Regime (TPR) from 15 May 2026.

Digital Finance and Fintech

7. HMT announces appointment of HSBC and Ashurst to lead digital gilt issuance project

On 12 February 2026, HMT announced the appointment of HSBC as the platform provider for the Digital Gilt Instrument (DIGIT) pilot issuance. The announcement follows the Government's invitation to tender for the DIGIT in October 2025.

The Government has also appointed Ashurst LLP to provide legal services for the DIGIT pilot. Our digital assets team, led by Etay Katz, is supporting the government in its DIGIT launch preparations.

The pilot's design features include DIGIT being digitally native, short-dated, issued on a platform operating within the Digital Securities Sandbox, delivering on-chain settlement and independent of the Government's main debt management programme.

The pilot seeks to:

explore the application Distributed Ledger Technology (DLT) to UK sovereign debt issuance; and
catalyse the development of UK-based DLT infrastructure and its wider adoption across UK financial markets.

The Government is currently engaging with additional suppliers to ensure the DIGIT is accessible to a wide range of participants and support the development of secondary markets.

8. FCA commissions independent assessment to support establishment of open banking Future Entity

On 6 February 2026, the FCA published a letter to trade associations outlining its plans to commission an independent assessment to support the establishment of a Future Entity (FE) for open banking.

The FCA has appointed KPMG to assess proposals from organisations seeking to lead the establishment of a standards-setting body for UK open banking APIs capable of becoming the FE. The assessment aims to identify the organisation best placed to take forward the establishment of such a body ahead of legislation.

The FCA confirmed it will not participate in or influence the substantive evaluation of proposals during the assessment period. The 12-week assessment commenced in February 2026, with KPMG expected to share the final report with trade associations in early April 2026. The FCA will also publish the final report on its website. The recommendation produced by the assessment will not be binding.

Firms wishing to engage with the assessment may submit views via their trade associations or directly to KPMG. Going forward, HMT is expected to lay the Open Banking statutory instrument by the end of 2026, which will establish the legislative framework for the FE.

9. HMT publishes the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026

On 4 February 2026, the Government made the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (S.I. 2026/102) (the Regulations), as part of the delivery of the UK's financial services regulatory framework for cryptoassets. The core of the regime amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (RAO) to define the principal categories of cryptoassets that will be part of regulation: 'qualifying cryptoassets', 'qualifying stablecoin' (a subset of qualifying cryptoassets) and 'specified investment cryptoassets'.

The changes introduced by the Regulation include:

a prohibition on public offers of qualifying cryptoassets unless an exception applies;
a market abuse framework for relevant qualifying cryptoassets, including prohibitions on insider dealing and market manipulation; and
savings and transitional provisions and new FCA powers to oversee compliance.

The provisions in the Regulation enabling the FCA to make rules, give guidance, issue directions or begin accepting Part 4A permission applications come into force on 26 February 2026. The Regulations otherwise come into force on 25 October 2027.

ESG

No new updates.

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