Still in motion – Revisiting our Global FSR Outlook 2025 

In January, we highlighted how many financial services regulators found themselves in the unenviable position of balancing economic growth and competitiveness objectives set by governments with more traditional objectives and stakeholder expectations, such as consumer protection, market integrity and financial stability. As 2025 draws to a close, there is no sign of let up in the regulators' balancing act. 

Efforts to rebalance risk have been evident in many jurisdictions, including in the European Union (EU). At the start of 2025, European Commission President Ursula von der Leyen called on governments to help turn around the bloc’s sluggish economy, setting out in her Competitiveness Compass a range of policies designed to boost growth.

In the UK,  the Chancellor lit the touchpaper on a raft of changes in July; christened 'the Leeds Reforms', these recalibrations and refinements are intended to smooth the running of the regulatory machine. Among them is carving some of the UK's individual accountability framework – the Senior Managers and Certification Regime (SMCR) – out of legislation in favour of regulators' rules. And individual accountability – both in terms of rules and also regulatory expectations – is a topic we will be looking at again in 2026. 

The focus on growth in the UK has also been a key driver in the Financial Conduct Authority (FCA) committing to review the application of its Consumer Duty rules to wholesale firms – we expect to see progress on this initiative in 2026. The lack of clarity around the Duty's application to wholesale firms has been illustrative of how an outcomes-focused regime requires careful regulatory communication and execution.

As the focus on growth spread globally, a drive to lift productivity saw the Australian Government call on regulation to be an enabler, not a roadblock. Australia’s current regulatory porridge has been under a spotlight for simplification, but with little concrete action to date. 

Competition to be the winning jurisdiction for crypto business prompted a lot of regulatory lifting in 2025. Hong Kong, as one of the first jurisdictions to introduce an investor protection-focused regulatory response to cryptoasset-related activities, has continued to expand its regulatory framework, taking forward a range of initiatives set out in the Securities and Futures Commission's (SFC's) ASPIRe Roadmap published at the start of 2025. In addition, the Hong Kong Monetary Authority (HKMA) implemented a licensing regime for stablecoin issuers in August 2025, shortly after the Government issued its second policy statement on the development of digital assets in June.

The EU's Markets in Cryptoassets Regulation (MiCAR) became fully applicable at the end of 2024, with 2025 being its first year of operability. Meanwhile the U.S., UK and Australian regimes are still in development. Whether there is a first mover advantage is not yet clear. 

With the U.S. Administration shifting to be more favourable to crypto, the landscape in 2025 was decidedly different across the board. Even at the global level, the tune has changed, with the Basel Committee on Banking Standards (BCBS) agreeing in November to expedite a review of elements of the prudential standards for cryptoassets – a move which follows influential industry bodies expressing concerns about the suitability of standards in a publicly released letter in August 2025.

We also discussed the emergence of a new regulatory approach – one where regulators dipped into their toolkits with novel applications in mind. In part, these moves were facilitated by technology as regulators across the world 'up-teched' to meet the challenges of supervising. 

In Australia, the Australian Securities and Investments Commission (ASIC) launched a new digital licensing portal and made use of uplifted data collection practices to start publishing an annual interactive dashboard on breaches reported to the regulator. It showed agility in pivoting away from a plan to ‘name names’ in its breach reporting data, and established a consultative group on regulatory simplification, with representatives from business and consumer groups and technical input from expert advisers.

The UK saw the FCA settle its long running dispute with Bluecrest. This leaves a 2024 Court of Appeal decision untouched, and gives the regulators a basis to claim very broad powers to vary firm permissions to achieve supervisory results which might otherwise be pursued by powers which require the FCA or Prudential Regulation Authority (PRA) to satisfy more complex requirements. Alongside a greater use of the power to vary of permissions more generally this year, we also saw an increased trend in the use of the attestations to require firms to provide various formal confirmation to the FCA.

Leveraging technology and finding ways to simplify regulators’ roles (or ‘do more with less’) will inevitably continue to be a prominent feature of the financial services landscape in 2026 and beyond.

Perhaps in response to the increasing variety of financial products and services on offer across distribution channels, the range of options for redress, remediation and compensation grew – particularly so where fraud was concerned. In 2025, with bad actors frequently 'in the ether', the industry continued to bear the weight of correcting wrongs for consumers. 

In Singapore, a mandatory shared responsibility framework (to deal with phishing scams) came into force in December 2024. There have been some signs of early success, as the Singapore Police Force has reported that from January to June 2025, the number of scam and cybercrime cases decreased by 21.5% to 22,476 cases, compared to 28,625 cases in the same period in 2024. The amount lost to scams also decreased, by 12.6% to about S$456.4 million in the first half of 2025, from about S$522.4 million in the same period last year.

Australia passed the 'world’s toughest' authorised push payment (APP) fraud prevention framework into law setting the foundation for its application to the whole ecosystems, covering banks, social media platforms, and telcos. The detail of the framework will become apparent in 2026. 

In the UK, a mandatory scheme for APP fraud came into force in October 2024.  Industry body, UK Finance, reported that losses from APP fraud in the first half of 2025 were £257.5 million which was a 12% increase from H1 2024. Unsurprisingly, the industry is keen to see public sector focus on prevention. 

But even away from financial crime, redress mechanisms were in the spotlight. In the UK, the Chancellor called on the regulator and the Financial Ombudsman Service (FOS) – the independent financial services complaints scheme which is free for consumers to access – to work to 'modernise the redress framework, so it better serves consumers and provides greater stability for firms to invest and innovate'. Of particular note is the proposal to recalibrate the 'fair and reasonable' test to ensure the FOS better aligns with FCA rules. Additionally, we think that the FCA's use of its consumer redress scheme rule-making powers in relation to motor finance discretionary commission offers an early view of the forthcoming 'modernised' approach of the regulator in mass redress events. Consumers are due to start receiving compensation in 2026 once the motor finance scheme rules have been finalised.

Our commentary on the importance of smart data initiatives in the policy mix was born out as many governments and regulators saw promise in providing an environment for Open Banking and Open Finance to flourish. 

The UK FCA's 2025-2030 Strategy which was issued in March 2025, spoke about 'a smart data revolution' in which Open Banking would be on a commercially sustainable footing which had a free-to-access model element and Open Finance would deliver vastly improved consumer choice and support. The regulatory foundations for the first Open Finance are expected to be in place in the UK by the end of 2027. 

Meanwhile, Australia expanded Open Banking (called the consumer data right or CDR) to other sectors outside banking and explored the introduction of action-initiation. 

In the EU, progress on the Financial Data Access Regulation (FIDA), which provides the basis for Open Finance, is well underway; the legislation is expected to be applicable from 2027. In August, we released our FiDA Checklist as an aid to firms' and market participants' implementation planning.  

Also in the EU, the EU Data Act became partially applicable on 12 September 2025. The Act applies to providers of data processing services – such as IaaS, PaaS, or SaaS – that are providing services to customers in the EU, including financial services firms (although financial services firms will need to assess whether they might be within scope as a data processing service provider). The regulation aims to remove obstacles to switching between data processing service providers, for example, by gradually eliminating the switching charges and setting out contractual requirements concerning switching. Being able to switch providers with less (or even no) charges or risk of losing data introduces significant flexibility. 

Perhaps the hottest topic for policymakers remains calibrating the right approach to AI – a topic we will revisit in the Global FSR Outlook 2026.

The push for growth and global competitiveness is having a significant influence on how jurisdictions are approaching technology generally, and AI in particular. At the surface level, there looks to have been a shift from risk aversion to leveraging technology for economic growth. But drilling down from that surface level, the picture is more nuanced, with regulators, policy makers, and business carefully considering – and calibrating – that risk and opportunity balance.

The EU has the world’s first comprehensive AI-specific legal framework, the AI Act, which applies a risk-based approach calibrated to an AI system’s potential threat to health, safety and fundamental rights.  The Act was adopted in 2024, with incremental implementation rolling from August 2025 to August 2027.

With the legislation finalised, the European Commission followed up with an AI Continent Action Plan in April 2025. With the goal of establishing the EU as a global leader in AI, the plan covers the building of relevant infrastructure, increasing access to high-quality data, fostering AI adoption in strategic sectors, and strengthening AI skills.

In the U.S., one of President Trump's early Executive Orders (E.O. 14179) gave a clear message about the Administration's stance on AI. Entitled 'Removing Barriers to American Leadership in AI', E.O. 14179, the order focused efforts on ensuring that the U.S. retained its global leadership position on AI, and required an AI Action Plan, which was delivered in July covering accelerating innovation, building infrastructure, and leading at the international level in a diplomatic and security context.

The UK does not currently have dedicated AI regulation. The UK FCA’s vision for AI as articulated by Jessica Rusu, Chief Data, Information and Intelligence Officer, is: ‘To give firms confidence to invest in AI in a way that drives growth and delivers positive outcomes for consumers and markets while offering insights to design and deploy responsible AI.’ 

In October 2025, the UK FCA's 'Supercharged Sandbox' in collaboration with NVIDIA opened for testing. And the Government is now advancing a new AI Growth Lab concept, a cross-economy sandbox to help inform policy development. The Lab is intended to enable 'controlled deployment of cutting-edge AI systems within live market environments'; regulations will be modified as necessary to facilitate this. Sectoral regulators, including the financial services regulators, will be involved.  Australia is adopting a wait-and-see approach. It legislated to ban the most harmful AI (i.e. deep fakes involved in child sexual exploitation), and produced principles focussing on AI governance but is otherwise waiting to see what the rest of the world does. 

Similarly in Hong Kong, the HKMA's GenAI sandbox initiative has enabled banks to pilot use cases since August 2024.  A report was published in October 2025 highlighting the key findings and providing guidance to help banks address key challenges throughout the AI implementation lifecycle, including data preparation, model fine-tuning, output evaluation, and ongoing monitoring and optimisation. The HKMA has also continued to provide other guidance and assistance to banks, including on the use of AI in money laundering and terrorist financing monitoring systems.

Including an article on quantum computing in the Global FSR Outlook 2025 provided an opportunity to give an update from our earlier coverage in the 2023 edition. In the second half of 2025, there has been an uptick in output from regulators. This perhaps reflects that quantum as a reality is getting closer, sooner. 

In Singapore, the regulator – the Monetary Authority of Singapore (MAS) – concluded trials in the Quantum Key Distribution (QKD) sandbox. In a report issued at the end of September, MAS highlighted the potential for QKD to make communication networks more secure. In addition to technical insights, MAS said that the sandbox exercise had also identified the important role for senior management of institutions in developing in-house competence and in ensuring sufficient budget allocation and 'resources to work on quantum-safe initiatives'.

The UK's Cross-Market Operational Resilience Group (CMORG) issued a call to the financial services sector in June 2025 to prepare for a future of quantum-enabled cyber threats, and set out new industry guidance. 

In October, the UK FCA published a research note on the potential applications of quantum computing in UK financial services and how firms and regulators can prepare. Whilst noting that quantum presents a 'national growth opportunity', the regulator stressed the need for coordinated effort across the public and private sector to take advantage of that opportunity. And the Bank of England has warned firms that, given the scale and complexity of migration, preparations needed to happen now, so that the financial system is able to adapt to a post-quantum future. 

At the more mundane level, the UK FCA's list of warnings about unauthorised firm and individuals has been replete with names that include the term 'quantum' this year. MAS also added one to its Investor Alert List this year in January. Outside of the legitimate regulated space, 'quantum-washing' is emerging.

Infrastructure innovation happened across the board in 2025. From commitments to T+1 to exploring new types of market to tokenization and more.

With the U.S. and other jurisdictions already trading T+1, both the UK and EU are progressing to the shorter settlement on 11 October 2027. Plans appear well-advanced in both jurisdictions. 

In July, the Hong Kong Exchanges and Clearing Limited (HKEX) launched a discussion paper on  accelerated settlement in the Hong Kong cash equities market (which currently operates on T+2). HKEX reported that, based on its statistical analysis of available data, 'up to 88 per cent of cash equities globally by trade value will be in T+1 or T+0 markets'. Although the next steps are yet to be decided, the HKMA has already written to the banking industry to encourage the industry to make early preparations for an accelerated settlement cycle.

In addition to T+1, 2025 saw a range of other initiatives, particularly around tokenization. In November, the International Organization of Securities Commissions (IOSCO) published its final report on tokenization and, while IOSCO has not developed a specific global standard for tokenized assets, it encouraged its members to consider applying the Policy Recommendations for Crypto and Digital Asset Markets and Policy Recommendations for DeFi for tokenized assets. 

Developments in payments infrastructure were also a feature of 2025. The Bank of England, for example, launched its revamped Real Time Gross Settlement (RTGS) service – RT2 – in April.  The new RT2 provides a platform for further innovation, and, in October, the Bank set out plans to launch a Synchronisation Lab to explore atomic settlement in central bank money in the Spring of 2026. 

The Lab follows on from the Bank's engagement with Project Meridian FX which reported in April 2025. Project Meridian FX was an experiment coordinated by two Bank of International Settlements (BIS) Innovation Hub Centres with the central banks of the UK, France, Germany, Italy and the European Central Bank.

Many jurisdictions continued to explore the potential of central bank digital currencies (CBDCs) in 2025.  However, in the U.S., President Trump issued E.O. 14178  'Strengthening American Leadership in Digital Financial Technology' which includes a prohibition on the establishment, issuance of promotion of CBDCs 'within the jurisdiction of the United States or abroad'.

In January, we referred to non-bank financial intermediation/intermediaries or 'NBFI' as a 'regulatory orphan' - regulators are still largely confined to monitoring NBFI.

In July, the Financial Stability Board (FSB) issued recommendations on addressing the financial stability risks created by leverage from NBFI, published its annual progress report on enhancing resilience in the sector and set out a workplan on nonbank data. New FSB Chair, Andrew Bailey the Governor of the Bank of England – wrote to G20 Finance Ministers and Central Bank Governors to set out his priorities for the global standard setter, highlighting the importance of both the FSB and national authorities enhancing their NBFI surveillance capabilities and of the implementation of globally-agreed policies on NBFI.

The FSB is expected to release a report on its annual monitoring exercise in December, this will set out how much the sector has grown (or shrunk) in 2024 against the pace of banking sector growth and will assess the NBFI share of global financial assets. 

Meanwhile, the Bank of England plans to conduct another system wide exploratory exercise – a type of stress test – in 2026 which will focus on understanding how private markets might operate under stress and what it could mean for financial stability and the economy of the UK. 

Reflecting that the UK is the largest centre for private fund management in Europe, FCA work in this space became more evident in 2025. Early in the year, the FCA shared the findings of its multi-firm review of valuation processes for private market assets. The regulator has also commenced work looking at conflicts of interest in private markets.

The last chapter of the Global FSR Outlook 2025 was about what changing demographics may mean for financial services.  In jurisdictions experiencing the phenomenon of aging populations, there was a perceptible uptick in interest often in conjunction with the increasing cost of living in those jurisdictions and consumer vulnerability. But concrete regulatory action or intervention is less discernible.

In Singapore, numerous financial transaction safeguards (that were proposed by the MAS) for vulnerable retail clients will take effect from the end of December 2025. Such safeguards would include enhancing pre-transaction checks and requiring vulnerable retail clients above a certain age to be accompanied by trusted individuals when receiving investment recommendations. 

Very recently, the UK FCA CEO Nikhil Rathi commented at the L&G Mortgage Club's 30th Anniversary Conference: 'Further thought and engagement is needed, but the aim is clear: an industry supporting consumers to fully understand their options for funding later life, receiving timely and appropriate support and advice, with products that deliver positive outcomes, offering fair value'. 

This is one issue which will continue to mature.