The year 2025 marked a turning point, at least in atmospheric terms, in financial services regulation in the EU. Unlike in the USA, there has not yet been any noticeable relaxing of regulation. However, for the first time since the financial crisis in 2007/2008, the key political and regulatory decision-makers have changed course by questioning the sense behind ever tighter and deeper regulation. Up to now, the mantra for this turnaround has been “simplification without deregulation”. An example of this can be seen in the initiative taken on by the German Federal Financial Supervisory Authority (BaFin), which is aimed at reducing the complexity of regulatory rules. This was underlined by the proposals it put forward jointly with the German Bundesbank to simplify the capital requirements for smaller banks, with the ECB’s Governing Council also taking a similar approach. At the end of 2025, BaFin also communicated its intention to reduce the admin burden placed on mortgage banks (Pfandbriefbanken): From January 2026, these institutions will no longer be required to submit cover registers (Deckungsregister) to the regulatory authority. In addition, the EU Commission’s decision to postpone the implementation of numerous Level 2 acts in financial legislation and to subject them to a fundamental review is also noteworthy. This trend, which was already apparent in 2025, will continue to be reflected in the legislative procedures and the activities of regulatory authorities in 2026, including the Austrian FMA, for instance. For banks and financial service providers, this means that in addition to implementing new and existing requirements, they must not lose sight of the various initiatives aimed at simplifying existing complex rules, for example in the context of the Savings and Investments Union (SIU).

There is also a particular focus on artificial intelligence (AI), which continues to permeate, deeper and deeper, into financial institutions and their business models, and not only to increase efficiency and reduce costs, but also to transform customer interaction and product ranges, as well as in risk and compliance management. In the new year, implementing the AI Act will also take centre stage, which requires banks to ensure transparent governance and structures for the integration of AI systems.

With all this in mind, the following briefing provides an overview of the key developments in financial services regulation in the EU, Germany and Austria in 2026, focusing on the areas of banking, securities, market infrastructure and payment services supervision, consumer credit law, as well as anti-money laundering, digitalisation and sustainability. 

We are continuously monitoring these and further developments and are always happy to answer any questions you may have or to engage in further discussion.