UK firms should expect heightened FCA attention on Consumer Duty, financial crime, and safeguarding compliance, with continually high standards at the application gateway.
By Brett Carr, Stuart Davis, Gabriel Lakeman, and Christian F. McDermott
On 25 March 2026, the FCA published its Regulatory Priorities report aimed at firms operating in the UK payments sector. The report sets out key areas that regulated firms should focus on, in particular:
- Identifying and quickly closing gaps in their compliance with the Consumer Duty
- Preparing for the new PS25/12 safeguarding regime that is live in May
- Becoming familiar with the recent policy statement (PS26/2) on Incident and Third Party Reporting and beginning preparations for implementation (see this Latham blog post)
In addition to setting out priorities, the FCA also highlights ongoing areas for concern: the report stated that some firms are still falling short on ensuring their compliance with the Consumer Duty, protecting the integrity of the financial system by combatting financial crime, and failing to protect customer funds. While the FCA approach appears to welcome innovation, the regulator appears to be losing patience with continued non-compliance in these areas.
To help firms improve their performance in these areas, the FCA will go further in its approach to supervision by:
- expanding dedicated supervisory contacts;
- applying a more risk‑based approach for the largest firms; and
- enhancing efficiencies in data collection.
The FCA’s goal is to divert its attention to areas where harm is greatest and take stronger, faster action, rather than directing intensive attention on firms that are otherwise doing the right things.
The FCA’s Priorities
- Innovation and the future: The FCA will continue its policy work in areas such as open banking, stablecoins, and modernising payments regulation to support positive innovation and competition.
- Consumer Duty: Firms can expect engagement from the FCA on the implementation of the Consumer Duty. They should immediately address gaps in compliance, as the FCA is going to take appropriate action against non-compliance.
- Financial system integrity: The FCA will continue its work to fight financial crime, including fraud and money laundering. Firms are encouraged to familiarise themselves with the new policy statement on incident and third-party reporting (see above).
- Keeping customer’s money safe: The FCA is looking for firms to make investments to manage risks and comply with the new safeguarding regime.
Other Reminders
Firms are also reminded of:
- the Payments Forward Plan published in February 2026, which presents a consolidated view of the regulatory pipeline and its intended outcomes, to help firms plan and innovate;
- the new approach to performing Strong Customer Authentication (SCA) and the contactless payment limits set out in the March 2026 updates to the regulatory technical standards; and
- FCA guidance on good and poor practice for firms communicating the cost of international payments and for risk management and wind-down planning, which firms should review and take appropriate action.
What’s to Come
The FCA plans to:
- continue its work establishing a Future Entity for open banking;
- support HM Treasury in introducing legislation to grant it powers to set new rules for the long-term regulatory framework;
- review the payments and e-money regulations, including whether to change existing or develop new regulation to support agentic AI payments; and
- consider the appropriate way in which stablecoins and other tokenised payment instruments can be brought into regulated payments.