FCA: Payments are Evolving to Make new Priorities

In its newly released Regulatory Priorities report for 2026, The Financial Conduct Authority has scrapped more than 40 individual portfolio letters in favour of a single, annual one-stop shop designed to guide boards and chief executives through a rapidly evolving market.

This pivot comes at a time of significant technical expansion.

According to the watchdog's report, the payments sector is being propelled by open banking alongside digital methods like stablecoins and tokenised deposits.

For fintechs, the message is clear: the regulator wants to reward those doing the right thing with less intensive oversight while accelerating action against high-risk players.

Open banking remains the crown jewel of the UK fintech ecosystem.

In 2025, more than 16 million people and businesses utilised these services, facilitating an average of 29 million payments per month.

To maintain this momentum, the FCA is spearheading the creation of a Future Entity to oversee the long-term regulatory framework.

The regulatory body says it is committed to being “predictable, purposeful and proportionate”.

Following this commitment, the FCA says it is focusing on unlocking commercial models for variable recurring payments (VRPs).

The goal is to move beyond basic account information into high-value use cases like utility bills and e-commerce.

Stablecoins and AI remain the focus

The regulator is also formalising its stance on digital assets.

By the end of 2026, the FCA intends to publish final rules for stablecoin issuance in the UK.

A dedicated stablecoin cohort is already active within the Regulatory Sandbox, allowing firms to test retail and cross-border payment instruments in a controlled environment.

AI is another priority area.

The FCA is currently running its Supercharged Sandbox and AI Live Testing programmes to allow firms to experiment with agentic AI payments.

An evaluation report on these trials is also expected by the end of 2026, which will likely set the tone for how AI-driven fintechs operate in the future.

Matthew Long, Director of Payments and Digital Assets, notes: “The payments sector continues to evolve at pace, from open banking to new digital payment methods.

“We’re working closely with industry so innovation happens safely and delivers good outcomes for consumers and businesses.

“By setting out our priorities clearly, we want firms to understand where to focus their efforts – helping to deepen trust, rebalance risk and support sustainable growth.”

Despite the push for growth, the FCA is not relaxing its standards on consumer safety.

A new Safeguarding Supplementary Regime is set to come into force this May.

This follows concerns that some firms have failed to develop robust wind-down plans or risk management frameworks.

The scale is significant: electronic money institutions safeguarded approximately £26bn (US$34.8) in 2024.

Firms are also expected to embed the Consumer Duty more deeply.

While customer complaints to the Financial Ombudsman Service fell 9% between 2024 and 2025, the FCA has identified ongoing gaps in how firms handle vulnerable customers and international payment transparency.

Ultimately, the report serves as a roadmap for firms to align with the FCA’s shift toward a more proportionate regulatory environment.

By replacing dozens of disparate portfolio letters with this consolidated annual report, the authority aims to provide a one-stop shop for boards to review their strategic obligations. 

Central to this transition is a risk-based approach where firms demonstrating high standards of governance and consumer protection will face less intensive attention, while the regulator remains robust in using enforcement tools against those failing to keep customer money safe or mitigate financial crime.