FCA overhauls payments regulatory framework for 2026, formalising stablecoin and open banking priorities while scrapping 40 portfolio letters in favour of single annual guidance

The Financial Conduct Authority (FCA) has published its 2026 Regulatory Priorities report for the payments sector, marking a significant shift in supervisory approach. The regulator has scrapped more than 40 individual portfolio letters — which had previously been sent to different categories of regulated firm setting out tailored supervisory expectations — in favour of a single annual publication addressed directly to boards and chief executives. The report identifies the payments sector as being driven by open banking (the system that allows regulated third parties to access customer bank account data with consent), stablecoins (digital tokens designed to maintain a stable value, typically pegged to a fiat currency such as the US dollar or sterling), and tokenised deposits (bank deposits represented as digital tokens on a distributed ledger). The FCA is formalising its regulatory stance on stablecoins as part of the UK's broader Digital Securities Sandbox and upcoming crypto asset regulatory regime. The pivot to a single regulatory priorities document is designed to reduce compliance burden and give regulated firms — from large banks to small e-money institutions — a clearer and more consistent view of supervisory expectations. It also signals the FCA's intention to move toward a more principles-based, innovation-friendly posture in payments, aligning with the government's stated objective of making the UK a global hub for fintech and digital finance. The report arrives at a moment when the intersection of AI and payments is becoming commercially significant: the has noted that AI is reshaping payments fraud detection, customer onboarding, and transaction monitoring, all of which have direct implications for regulated firms' compliance frameworks.