Freshfields FS Insights
Welcome to the August 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. If you would like more information regarding any of these developments, please get in touch with your usual Freshfields contact.
This month’s edition includes the following topics:
EU banking competitiveness
EU banking competitiveness communication: key takeaways
On 17 July 2026, the European Commission published its Communication on the Competitiveness of the Banking Sector and the Single Market in Banking. The Commission's assessment: EU banks have become resilient, well-capitalised and profitable over the past 15 years, acting as shock absorbers rather than amplifiers of economic stress during the Covid-19 pandemic, the Ukraine-related energy shock, and the 2023 US/Swiss banking turmoil. At the same time, the sector remains highly fragmented along national borders and parts of the regulatory framework are unduly complex. As we describe in our blog post, the Communication sets out measures to address these challenges, built around three objectives. We will continue to monitor this file and report back once the Commission tables its legislative proposals.
AI
AI in financial services: emerging regulatory expectations for governance and operational resilience
Financial services firms have been using AI for several years to improve efficiency across their operations and to offer new products and services. The continuing question is how they do that in a way that mitigates risks for the firm, their customers and the financial system while remaining compliant with applicable law and regulation and meeting regulators’ expectations. There have been a number of AI-related publications and updates in recent weeks that are relevant for UK financial institutions. Taken together, they highlight emerging regulatory thinking, and the practical considerations firms will need to address in their AI strategies and governance frameworks. For more information, see our blog post.
From assistant to decision-maker: the FCA’s Mills Review charts AI’s path through retail financial services
On 6 July 2026, the UK Financial Conduct Authority (FCA) published the much-anticipated final report of the Mills Review. The Review explores how artificial intelligence (AI) could reshape retail financial services by 2030 and beyond and sets out seven priority recommendations for how the FCA should respond to that transformation. In this briefing, we highlight our key takeaways from the Review and consider what they may reveal about the FCA’s emerging approach to regulating the use of AI in retail financial services.
Financial services AI adoption plan: HM Treasury accepts independent AI Champions’ recommendations
On 14 July 2026, HM Treasury (HMT) published the Financial Services AI Adoption Plan, prepared by its independent AI Champions. HMT has welcomed the Adoption Plan, accepted its recommendations and confirmed that it will work with regulators and industry on next steps. This includes considering the AI Champions’ work alongside other relevant developments in this area, such as the FCA’s recent Mills Review. In this blog post, we discuss the key themes from the Adoption Plan.
UKJT legal statement on liability for AI harms: applying existing principles to increasingly autonomous systems
Accountability is a recurring theme across the UK’s recent AI policy agenda, but the debate is not confined to regulation. On 7 July 2026, the UK Jurisdiction Taskforce (UKJT) published its final legal statement on liability for AI harms, examining whether existing principles of English private law are capable of allocating responsibility when the use of AI causes harm. The UKJT’s central conclusion is that English law is generally capable of addressing harms caused by the use of AI, without a need for a wholly new, AI-specific liability regime. For an overview of the UKJT’s statement and its implications, see our blog post.
Payment services regulation
Modernising payment services regulation: the FCA in the ascendancy
On 14 July 2026, HM Treasury (HMT) published its consultation Modernising Payment Services Regulation, setting out the UK Government's intentions for the future regulation of payment services and electronic money. The consultation is wide-ranging, but read as a whole it is less about any single reform than about a change in approach: not just how payments are regulated, but who holds the pen. In this blog post, we draw out the themes we think matter most for firms including those relating to the payments framework, tokenised payments, agentic payments, and Open Banking.
A step toward an ancillary services exception? The ECJ’s ruling in Betaal Garant
Following our earlier analysis of Advocate General (AG) Campos Sánchez-Bordona's opinion in Betaal Garant Nederland CV v De Nederlandsche Bank NV (Case C-51/25), the European Court of Justice (ECJ) delivered its judgment on 16 July 2026. In addressing a fundamental question concerning the outer limits of EU payment services regulation, the ECJ confirmed that the receipt and forwarding of client funds under a tripartite guarantee does not constitute a "payment service", and more specifically a "credit transfer", thereby largely following the position adopted by the AG. The ECJ's judgment has important implications for financial regulation across the EU, introducing much-needed limits to expansive interpretations of payment services legislation by national supervisors. In this blog post, we analyse the ruling and assess its impact.
Cryptoassets
UK FCA cryptoasset - mapping the regime
The FCA recently produced five policy statements and three finalised guidance papers, running to over 1,000 pages of content. Whilst the FCA did produce a summary page, for our own benefit, we have also mapped out the papers, where they came from and roughly what they cover. In case this is helpful (not everything is relevant to every player in this space), we thought it would be worth sharing!
Set in stone: five landmark crypto policy statements
On 30 June 2026, the FCA published five Policy Statements containing finalised rules for cryptoasset firms: PS26/9 (admissions, disclosures and market abuse regime for cryptoassets), PS26/10 (stablecoin issuance), PS26/11 (regulated cryptoasset activities), PS26/12 (the prudential regime for cryptoasset firms) and PS26/13 (application of the wider FCA Handbook for regulated cryptoasset activities). These FCA rules will provide the underlying detail supporting the new UK Cryptoasset Regulations 2026, which is expected to commence on 25 October 2027. This briefing takes each of the five policy statements in turn and focuses on what changed between consultation and the final rules.
One systemically important issuer, two regulators: Bank of England finalises systemic stablecoin policies and proposes joint regulatory approach with the FCA
The Bank of England published its systemic stablecoin policy statement on 22 June 2026, which includes a consultation on a draft Code of Practice. The policy statement and Code reflect feedback the Bank received in response to the proposals in last year’s systemic stablecoin consultation. In this briefing, we identify the key takeaways from the policy statement and assess the finalised policy positions against those proposed in the consultation, and we then consider the Bank of England’s and FCA’s joint approach document, published on 30 June 2026, which explains how the two regulators propose to collaboratively supervise systemic issuers in practice.
Tracing cryptoassets in the English High Court: what Wilden means for recovery claims
The decision in Stephen Wilden v Person Unknown and Huobi Global S.A. [2026] EWHC 1355 (KB) confirms that the English courts will continue to order the use of proprietary freezing injunctions and third-party disclosure orders to support victims of digital asset fraud, even where the assets have been deliberately mixed. For an overview of the decision and why it matters, see our blog post.
Federal banking regulators and FinCEN propose new customer identification and BSA/sanctions compliance standards for payment stablecoin issuers
On 22 June 2026, federal regulators released two additional notices of proposed rulemaking that would further build out the Bank Secrecy Act (BSA) and sanctions compliance framework to be applied to permitted payment stablecoin issuers (PPSIs) under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act). In this blog post, we summarise and highlight key takeaways from the two proposed rulemakings by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC) and Federal banking agencies.
Digital euro
Europe’s digital euro heads to last stage of negotiations - what Council and Parliament agree on, and where they still clash
The digital euro, Europe's central bank digital currency (CBDC) project, has been more than three years in the making since the European Commission tabled its Single Currency Package in June 2023. The package presented by the Commission comprises three proposed regulations: one establishing the digital euro, one covering digital euro services from payment service providers (PSPs) based outside the euro area, and one on the legal tender status of euro banknotes and coins. The Council and the European Parliament have now finalised their negotiating mandates and are heading into trilogue negotiations, with the aim of having the digital euro operational by 2029. In this blog post, we set out a high-level overview of selected open questions on the negotiators’ tables.
Securities regulation
CFDs, prediction markets, and the SEC’s expanding regulatory perimeter
The action by the US Securities and Exchange Commission (SEC) against Netrios and Red Acre reads, on its surface, like a traditional offshore derivatives case. In reality, it reflects something far broader: a regulator actively reasserting its role in a market landscape where financial exposure is increasingly constructed through digital platforms, synthetic instruments, and outcome-based contracts rather than traditional securities ownership. As set out in our blog post, the case provides a clear window into how the SEC is approaching emerging products—including prediction markets and DeFi-based trading systems—and how it intends to bring them within its regulatory perimeter.
Bank resolution
FDIC proposes sweeping changes to bank resolution planning requirements
The Federal Deposit Insurance Corporation (FDIC) has moved to sharply scale back the insured depository institution (IDI) resolution planning regime it had previously expanded in the wake of the 2023 bank failures by approving, on 25 June 2026, a notice of proposed rulemaking to revise its IDI resolution plan submission requirements. The proposed changes are substantial: they would codify but also go far beyond the FDIC’s frequently asked questions (FAQs) that were issued to already narrow the in-effect IDI resolution planning rule. In this blog post, we recap how the current regime took shape, break down what the proposal would change, situate it alongside the FDIC’s companion assessment proposal, and consider what’s next.
Consumer duty
Consumer Duty: FCA consults on scope and proportionality
On 29 June 2026, the Financial Conduct Authority (FCA) published its consultation paper CP26/23, proposing a package of targeted amendments to the FCA Handbook and the non-Handbook Guidance to the Consumer Duty (FG22/5) to clarify the scope of the Duty and allow the Duty to be applied in a more proportionate way, particularly for wholesale firms. While the consultation paper has clearly been drafted with the wholesale markets in mind, it also includes proposals that could have an impact on other stakeholders, such as distributors. For a detailed summary of the proposals and what they mean for firms, see our briefing.
Private credit
Private credit: a new opportunity in Austria
Private credit has been eyeing Austrian borrowers and situations for a while, but so far fund-originated lending to Austrian counterparties came with regulatory complexities overcoming which required a fact pattern that permitted doing so, a certain appetite and a fair amount of highly specialised legal advice implementing it. This will change in the near future. On 7 July 2026, the Austrian National Council passed the bill implementing AIFMD II (Directive (EU) 2024/927), giving loan-originating Alternative Investment Funds (AIFs) a clear, EU-wide aligned regulatory framework for Austria. See our blog post for what that means with a view to structuring the next deal.
Dematerialisation
Dematerialisation update: Publication of the DEMAT Report
The Dematerialisation Market Action Taskforce (DEMAT) published its long-awaited report on 14 July 2026, timed to coincide with the Chancellor's Mansion House Speech. The report sets out a detailed implementation plan for the UK's move away from paper share certificates — a reform that will have significant practical implications for listed companies. For more information, including next steps for companies, see our blog post.
Financial crime
FCA flags gaps in insurers’ financial crime framework
The FCA has published the findings of its multi-firm review into the design and effectiveness of financial crime systems and controls across 38 UK retail, wholesale, and life insurers. The review contains an important explanation of the FCA’s expectations of general insurance firms, which are outside the scope of the Money Laundering Regulations regime but are subject to the FCA’s general requirements in respect of financial crime. Insurance firms, whether or not they have participated in the review, should benchmark their controls against the FCA’s expectations and consider how best to address any gaps in the light of their assessment of the risk profile of their businesses. For more information, see our blog post.
FCA publishes findings on asset management and alternative firms’ financial crime controls
The FCA has published its findings on the financial crime controls of asset management and alternative firms. The review is intended to help firms reflect on the financial crime risks of their business and the effectiveness of the systems and controls they have in place. For an overview of the FCA’s findings, including financial crime failings that it has identified as well as practical examples of what it regards as good and poor practice, see our blog post.
Keeping pace with the UAE’s evolving anti-money laundering, counter-terrorism financing and counter proliferation financing regulatory framework
In anticipation of the Financial Action Task Force’s fifth round of mutual evaluations, which is currently underway, the UAE overhauled its anti-money laundering (AML), counter-terrorism financing (CTF) and counter proliferation financing (CPF) regime. This blog post outlines the key changes introduced by the new federal framework and recent developments in the UAE’s AML, CTF and CPF landscape.
Taxation of LLP members
BlueCrest v HMRC: Supreme Court rules on employment status of LLP members for UK tax purposes
When is a partner not a partner (for tax purposes, at least)? On 1 July 2026, the Supreme Court handed down its much-anticipated decision in HMRC v BlueCrest Capital Management (UK) LLP, providing further guidance on that question. Specifically, the case concerned the application of the UK’s “salaried member” rules (SMRs), which deem LLP members to be employees for UK tax purposes in certain circumstances. Despite the SMRs having been in force for over 10 years, BlueCrest is, to date, the only published case dealing with the substance of the rules, and the Supreme Court’s decision therefore provides further useful guidance on their scope and interpretation. While the decision will be of particular interest to the investment management sector given the BlueCrest LLP’s role as a sub-investment manager, it is relevant to all businesses which operate through UK LLPs (or have UK LLPs in their structure). More detailed analysis of the decision is available in this blog post.