Top five 2026 regulatory challenges for European financial institutions

Introduction

Financial institutions in the EU and the UK faced considerable regulatory uncertainty in 2025, and with the global regulatory landscape continuing to be challenged by geopolitical changes, significant technology developments and a drive towards regulatory simplification, 2026 is likely to be another year of heightened unpredictability. As highlighted in our recent article on the global compliance outlook, the traditional pillars of compliance—financial stability, sound governance, financial crime prevention, technological adaptation, transparency, and consumer protection—remain key but the ways in which regulators are approaching these priorities are evolving rapidly. In 2026, the most significant compliance challenges and opportunities will be shaped not just by the actions of individual regulatory bodies (who continue to draft and finalise rules that can significantly influence the Compliance team agenda), but also by the seismic industry developments transforming financial services.

This article explores some of these developments and provides an analysis of how UK and EU regulators are responding, offering practical insights for Compliance leaders navigating the year ahead. We have focused on largely new regulatory developments and requirements rather than existing obligations or those requirements already implemented such as the Digital Operations Resilience Act (DORA) and Sustainability regulations.

In addition, there are other emerging changes which Compliance leaders should continue to monitor closely in 2026 including the regulators’ increasing focus on non-bank financial institutions and private equity/credit.

The pace of regulatory simplification driven by competitiveness and economic growth objectives may vary between the UK and the EU — the UK adopting a rapid series of changes over a variety of Handbook areas whereas the EU has adopted a more gradual or procedural simplification approach in order to achieve consensus across the member states — but this simplification adds to the regulatory changes to be addressed in 2026. An important aspect of simplification is the reduction of regulatory reporting burdens. This welcome development is partly offset by newly proposed reporting requirements by supervisory bodies such as the Supervisory Resolution Board and Anti-Money Laundering Authority (AMLA).

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