What UK financial services regulation means for firms in 2026

UK regulators continue to face pressure to enable growth without compromising stability, beyond the headlines, firms face a complex picture.

In brief

• The UK government launched its “regulate for growth” agenda over a year ago and is increasing pressure on regulators to deliver results. 
• Despite positive headlines, regulators must balance growth ambitions with resilience, stability and consumer protection. 
• Amid the resulting uncertainty, firms should engage proactively with policymakers and address cross-cutting regulatory trends.

Financial regulation in the UK remains at a crossroads whilst the world around it evolves at speed. 

The growth agenda remains a key UK government priority. It is now over a year since the Chancellor’s 2024 Mansion House speech demanding regulation for growth, not just for risk, and the pressure for results continues to increase. 

The Mansion House Leeds Reforms were published in July 2025, setting out the government’s Financial Services Growth and Competitiveness Strategy. In October 2025, the government announced a public regulators’ dashboard, including key performance indicators (KPIs) and “cementing growth as a guiding principle for regulators”.¹

However, there has been relatively little substantial action so far, perhaps unsurprisingly. What might sound like a shift along a scale from caution to growth is, in practice, far more difficult, given the need to keep protections in place. 

At the same time, the landscape facing regulators and firms is becoming ever more complex. New technologies are transforming operations, but can also be used by bad actors, such as financial criminals. In parallel, international competition to lower regulatory burdens risks a race to the bottom and concerns persist about potential market risks. 

Our new report, What to Expect: UK Financial Services Regulation in 2026 (PDF), examines the factors at work amid the uncertainty. It also takes a sector-by-sector approach, covering insurance, wealth and asset management, pensions, capital markets and wholesale banking, retail banking and payments.

Likely outcomes 

There is ongoing debate about how much deregulation will be achieved. In this context, business leaders are frequently asking how to interpret the government’s rhetoric, what changes to expect and how they should prepare and respond.  

Outcomes aimed at growth are currently hard to predict. However, we expect at least the following likely responses from regulators, which firms operating in the UK would benefit from tracking over time: 

• Seeking “easy wins”: These can bring some upside with little downside risk. Reducing duplication in reporting requirements would be an example. 
• Lightening regulation in capital markets: This offers the potential to increase growth and international competitiveness without direct increased risk to consumers. 
• Encouraging innovation: This could be seen as a way to show support for growth and new technology, without allowing too much risk into the financial system. 

In all cases, regulators will expect firms to maintain high standards of governance and be able to evidence that any innovation supports good outcomes for customers. 

Bolder moves, for example on capital and liquidity requirements may happen, but will be closely linked to international developments like the implementation of Basel 3.1 in Europe and the US.²

Steps firms operating in the UK should take in 2026 to maintain regulatory compliance 

Amidst the uncertainty, firms should plan for multiple scenarios to remain resilient and compliant. They have a real opportunity to engage constructively with both government and regulators on growth-linked policy priorities. This includes utilising the feedback opportunities presented through the policy development process and maximising communication channels opened through regulator and industry-led initiatives to support the growth agenda. A proactive approach can help improve understanding, shape reforms and prevent unintended consequences. 

Firms need to identify key areas where we are unlikely to see regulatory rollback to help maintain focus. 

Broadly, firms operating in the UK should: 

1. Prepare to navigate volatility

It is important to invest now in proactive and agile stress-testing capabilities, with a focus on scenario depth and contingency planning. 

2. Plan for international fragmentation

The trend towards greater national regulation seems set to continue, firms should plan on this basis and adjust their plans where they operate internationally. This includes monitoring and assessing where home and host jurisdictions regulatory obligations or timelines for implementation diverge and investing in developing capabilities that allow for these disparate requirements to be met efficiently and cost-effectively. 

3. Combat external threats

This includes leveraging advanced data analytics and technology to proactively detect, prevent and respond to cyber and financial crime threats. Embedding operational resilience into change and third-party management programmes is also vital. 

4. Look for compliance cost efficiencies besides those from deregulation 

The opportunities come not just from reduced regulation, but also the effective use of technology and data. Firms should explore opportunities to pursue digital transformation, such using AI and automation to drive new efficiencies in operational processes and the management of customer interactions, whilst maintaining emphasis on regulatory fundamentals, such as robust controls. 

5. Review technology using the lens of outcomes-based regulation 

Technology, including new forms of digital assets and enhanced payment solutions, is unlocking the development of new products. At the same time, it is creating opportunities to enhance customer experience, for example, by enabling more personalised communications through artificial intelligence or streamlining onboarding with open banking. Firms will need to balance this innovation with ensuring compliance oversight and using AI to boost compliance capabilities. 

6. Strengthen governance

The regulators continue to emphasise that ultimate responsibility lies with senior managers, with increasing focus on board oversight and ways in which approaches and priorities are set at the top. Firms should review governance structures, strengthening the ability to demonstrate how senior management are engaging with key risks and tying the management of these to strategic priorities.