Welcome to the February 2026 edition of the Freshfields FS Insights newsletter, which contains a selection of thought leadership related to the financial services industry published over the past month by Freshfields lawyers from around the world, as well as upcoming dates for your diary. If you would like more information regarding any of these developments, please get in touch with your usual Freshfields contact.

The year ahead in financial services

The year ahead in financial services: 12 trends to watch in 2026

2025 was another transformative year for the financial services industry. Geopolitical risks arising from conflicts in Ukraine and elsewhere were compounded by new fissures in the world order. The international paradigm of cooperation and harmonisation was shaken by a shift towards aggressive tariff policies, regulatory competition and unilateralism. An increasingly bold Trump administration challenged the consensus on issues ranging from climate change to capital requirements for banks. Governments across the world are recalibrating their attitudes towards risk in order to get their economies growing again. Meanwhile, digital assets and tokenisation are on the rise, and the advance of AI is impacting every aspect of the way in which financial institutions do business.

We expect these trends to accelerate in the year ahead, creating opportunities as well as risks for the sector. The emergence of new technologies will drive increased investment in fintech as well as more M&A activity. It will also raise new concerns around operational resilience and cyber security. The growth of private credit is attracting interest from both borrowers and investors, as well as regulators trying to understand the impact on financial stability. The increasing participation of retail investors in private markets is opening up new sources of funding, while at the same time presenting new compliance challenges for private asset managers. In order to succeed in this dynamic environment, firms need to be nimble - capable of not only responding to the challenges of geopolitical risk, technological transformation and regulatory change, but turning them into an advantage.

In this briefing, we examine 12 of the most important trends in financial services, to help you navigate the year ahead. The 12 trends covered are:

1. Geopolitical risks
2. Deregulation and simplified/proportionate regulation
3. Retailisation
4. Private credit
5. Cybersecurity and operational resilience
6. Digital assets and tokenisation
7. FIG M&A
8. AI
9. ESG and sustainable finance
10. Market misconduct
11. Fraud
12. AML and sanctions

 Fintech

Freshfields fintech: our predictions for 2026

We have once again canvassed opinions from our Freshfields global fintech team for the year ahead, as we have done in previous years. In this blog post, we set out our predictions for 2026 across different jurisdictions. Our expectations include:

• Global fintech M&A: the return of the megadeal. We expect an uptick in fintech M&A, including consolidation between smaller fintechs and strategic acquisitions by incumbents and established fintechs, as well as potential IPOs for now quasi-incumbents.
• Tokenising the future: a new hope. Tokenisation, and the development of financial market infrastructure to enable this, will continue in 2026, although regulatory approaches remain inconsistent across jurisdictions. Progress toward harmonisation is anticipated but will likely be slow due to the fragmented nature of existing rules and guidance.
• Cryptoassets: developing in harmony? Last year we predicted that 2025 would see significant cryptoasset developments, and this has certainly proven true. The surge in valuation and market participation has inevitably sharpened the focus of regulators globally, and we anticipate that 2026 will be a pivotal year with key developments taking shape on both sides of the Atlantic.
• Stablecoins and CBDCs: A GENIUS awakens? Stablecoins saw increased adoption during 2025 and are expected to see a continuation of growth in 2026. We are expecting further movement regarding the potential issuance of central bank digital currencies (CBDCs) in various regions, too.
• When machines buy things: the rise of agentic AI payments. Agentic AI, or artificial intelligence capable of autonomous decision-making, is moving rapidly from concept to commerce. Payments businesses and large financial institutions are already integrating agentic AI payments, and we expect this trend to accelerate over the course of 2026.
• The regulators strike back: digital asset enforcement action. Combatting the criminal abuse of digital assets is high up the agenda for the UK government and regulators. As the shape of the UK regulatory framework for cryptoassets becomes more clear, firms that operate in the UK market will need to start planning for compliance.

 Tokenisation at scale: what 2026 will deliver

Tokenisation grew to become a hot topic during 2025 and we don’t see signs of interest in tokenising assets slowing down. The purported benefits of a tokenised world include the potential to reduce costs (especially in the event of disintermediation), increase speed of transactions, and develop interoperability with payment tokens on the same rails. Tokenisation is already starting to be used for commercial reasons, and we predict that trajectory will continue. 

At present, there is no consistent legal regulatory treatment of tokenised assets across jurisdictions. While we expect movement towards a coherent and unified position, progress will likely be slow due to the fragmented nature of existing rules and guidance. 

For more information, see our blog post, in which we explain what “tokenisation” means and describe some of its real-world use cases to date and our expectations for the year ahead.

Private capital

Private capital finance: outlook for 2026

As the private capital finance landscape and, in particular, the private credit market, continues its rapid evolution, what key themes will define the 2026 horizon? In this blog post, drawing on our expertise across different financing markets and our experience across jurisdictions, we introduce our insights on the trends we believe will prove most impactful for our clients in the year ahead.

Eyes on AI: the artificial intelligence outlook for private capital in 2026

The saying “there are decades where nothing happens; and there are weeks where decades happen” is particularly applicable to the timeline of artificial intelligence development and adoption. After decades of behind-the-scenes incremental improvements in the technologies underlying AI, we have witnessed in the last few years a period of rapid growth of AI usage in our personal and business lives. 

Like the rest of the business community, private capital is having its own AI moment. Different parts of the industry are moving, at varying paces and often in their own ways, to adopt and deploy AI in various parts of their businesses. Private capital managers are also using their influence as investors to drive greater AI adoption across their portfolios. 2026 could prove to be a watershed year for AI (or another watershed year following its rapid growth in 2025). In this briefing, we identify a few themes that private capital managers should consider as they look to future-proof their businesses in the increasingly AI-dominant world in which they are operating.

ESG and sustainability

7 ESG trends to watch in 2026

For those involved in ESG, 2025 brought significant disruption, marked by political uncertainty, regulatory delays and rollbacks, pressures on energy security and cost, and geopolitical tensions. As businesses enter 2026, they face a fragmented and dynamic regulatory, legal and political landscape. Sustainability reporting obligations continue to demand focus, alongside a growing need to manage anti-ESG sidewinds, uncertain climate transition frameworks, tighter product and supply chain scrutiny, and growing ESG-related litigation risks. At the same time, rapid advances in industrial technology, AI and digital governance are creating new risks as well as opportunities. 

This blog post explores seven key ESG trends that we expect will shape the global regulatory, litigation and corporate strategy landscape in 2026. 

What firms need to know about the PRA’s updated expectations on climate-related risks

On 3 December 2025, the Prudential Regulation Authority (PRA) published its Policy Statement PS25/25 on managing climate-related risks, providing feedback on responses received to Consultation Paper CP10/25 and setting out its new expectations in Supervisory Statement SS5/25, which came into force on 3 December 2025.

The PRA’s expectations apply to all UK insurance and reinsurance firms, banks, building societies and PRA-designated investment firms and represent a further step in the work to support firms’ approaches to climate-related risks. The revisions come as the severity and frequency of climate events – through either ‘physical risks’, such as flooding or extreme heat, or ‘transition risks’, such as challenges associated with decarbonisation – continue to increase.

For more information on the PRA’s key expectations, see our blog post.

Enforcement and litigation

UK financial services enforcement in 2025 and looking ahead

During 2025, the Financial Conduct Authority (FCA) continued to focus its enforcement efforts in familiar areas such as financial crime and market abuse, whilst taking steps to make its processes more efficient. After a relative surge in FCA published enforcement activity in 2024, numbers dipped slightly in 2025 but not to the levels seen in 2023. The largest penalty was a substantial £44m, which is the largest fine since 2022. 

We anticipate that enforcement outcomes will remain consistent to some extent in 2026, though not as high as what was seen in the peak post-financial crisis years. While the focus on areas such as financial crime and market abuse should continue, there may be more enforcement activity in other areas such as the Consumer Duty and non-financial misconduct. The FCA will continue to use its supervisory powers to intervene when it considers it appropriate to do so. The redress exercise for motor finance customers, for example, will be a big focus over the coming year.

In this article, which was first published in Thomson Reuters Regulatory Intelligence in January 2026, we discuss discusses trends in financial services enforcement in 2025, and predictions for what is on the horizon in 2026.

Financial services disputes in focus: key themes from 2025 and outlook for 2026

A series of key English court decisions in 2025 reveal the litigation trends that are poised to shape the banking and financial services sector in 2026 and influence the direction of travel in the longer term. In this article, which first appeared in the January/February 2026 issue of PLC Magazine, Emma Probyn, Julia Schulman and Emma Leung from Freshfields review banking and financial services litigation from the English courts in 2025, and trends for 2026. Among other things, they discuss recent case law on consumer finance and secret commissions, sanctions compliance, authorised push payment fraud, and contractual interpretation, as well as the courts’ approach in judicial review challenges to regulatory decisions.

Tariffs

Greenland tariff threats – assessing the EU and UK responses and considering the US legal basis

On 17 January 2026, the President of the United States publicly threatened to impose tariffs (up to 10 percent on February 1, rising to 25 per cent on June 1) on goods originating from eight European countries (Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland) in response to these countries’ opposition to US efforts to acquire Greenland. These tariffs would be added to the 10 percent and 15 percent “baseline” tariffs that already apply to the UK and EU, respectively.

Although the position has calmed down, and a framework agreement on Greenland is reportedly now being discussed, the incident highlighted the ongoing uncertainty around US tariff policies. In this blog post, we consider the EU and UK response to the latest threat, as well as the potential impact of the US Supreme Court’s imminent ruling on the tariffs imposed by the President under the International Emergency Economic Powers Act of 1977 (IEEPA).

Capital markets

The new UK public offers and admissions to trading regime: some top tips for capital market participants

The long-awaited moment has finally arrived… the UK’s new public offers and admissions to trading regime is now in place. The Public Offer and Admissions to Trading Regulations 2024 (POATRs) now separate the treatment of UK public offers and admissions to trading.

Public offers are now prohibited, unless they fall into one of a defined list of exceptions in the POATRs (note that issuers using the UK capital markets will benefit from a bespoke exception from the public offer regime, for offers of securities that are, or are to be, admitted to trading on a UK regulated market or primary multilateral trading facility). Prospectuses will no longer be required nor approved by the FCA for public offer purposes. 

Prospectuses do, however, remain the starting point for admissions to trading on a UK regulated market, unless a prospectus exemption applies. The framework for prospectuses in respect of admission to trading on a UK regulated market is set out in the FCA’s new Prospectus Rules: Admission to Trading on a Regulated Market sourcebook (PRM). 

In this blog post, we highlight some top tips to keep in mind when navigating the new regime.

Targeted support

FCA unveils near-final rules for targeted support in pensions and retail investments

On 11 December 2025, the FCA published a policy statement (PS25/22) outlining near-final rules for a new regulatory framework on targeted support in pensions and retail investments. This marks a significant milestone in the UK government’s initiative to bridge the ‘advice gap’ and improve the availability and affordability of financial suggestions for consumers. 

The new regime will enable authorised firms to offer ready-made suggestions to their retail clients that are designed for groups of consumers who share similar financial support needs, objectives or characteristics, helping them decide whether and how to invest or save for retirement. Unlike traditional regulated investment advice, targeted support does not require an individualised assessment of each consumer’s personal circumstances. Instead, recommendations are tailored to pre-defined consumer segments, making financial suggestions more affordable, scalable, and accessible to a broader population. Importantly, targeted support will be designated as a new specified activity under the Regulated Activities Order, meaning only authorised firms can provide this service.

The FCA's proposals for targeted support were subject to public consultation, namely CP25/17 in June 2025 and CP25/26 in September 2025. Both consultations closed in August 2025. In response to industry feedback, the FCA refined its original proposals, and we explore those changes in greater detail in this blog post.

Dates for your diary

Listed Company Roundtable: Activism

Our next Listed Company Roundtable will take place at 100 Bishopsgate on Tuesday 10 March 2026 at 9-10.30am, with breakfast from 8.30am.

With the UK remaining a primary target for activism in Europe and greater numbers of traditional investors adopting activist tactics, it is as important as ever for UK listed companies to focus on activism-preparedness. This session will focus on practical and legal guidance for listed companies to stay on the front foot when facing the strategic challenges and opportunities presented by shareholder activism.

At this session we will cover the following:

• MAR and strategic disclosure in an activist context: navigating inside information and disclosure obligations, and an update on FCA focus areas on UK MAR.
• Directors’ duties, governance and remuneration: governance considerations when faced with an activist together with the latest on director remuneration – a potentially soft target for activist investors.
• Proactive preparedness - knowing your register: tools for shareholder identification and approaches to stakebuilding.

If you would like to attend this event, please contact Jane Huckle.