How FOS reforms will affect financial services firms
In March 2026, the
08/05/26
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What the FCA’s retail banking regulatory priorities report means for retail banks
In March 2026, the FCA published its Regulatory Priorities report for retail banking, setting out where supervisory and policy focus will sit over the next 12 months. The report applies to retail banks and building societies and is directed squarely at boards and senior executives, signalling where regulatory expectations are most likely to be tested in practice.
Against this backdrop of structural change, seamless adaptation to new delivery methods and evolving operating models is essential. Branch usage continues to decline, digital delivery is now the default, and operating models are evolving through fintech partnerships, open banking infrastructures and new payment mechanisms. However, the regulator emphasises that innovations must not compromise access to essential services, operational resilience, or consumer outcomes – with the Consumer Duty remaining central to all priority areas.
Access to cash and essential banking services
The regulator continues to focus on the risk of foreseeable harm arising from reduced access to in person banking services as firms pursue digital first strategies at pace.
Retail banks are expected to:
- address significant gaps in local cash access in line with the Access to Cash regime
- demonstrate that changes to service delivery do not disadvantage customers who are less digitally capable
- ensure suitable alternative arrangements are operational before branch closures occur
- prevent financial crime controls from resulting in unnecessary or prolonged account restrictions
For boards, this priority is not a challenge to digital transformation itself, but to the governance and evidential discipline that sits behind it. Firms are expected to demonstrate how customer need assessments inform decision‑making, how identified risks are mitigated, and how outcomes are monitored once changes are implemented.
Consumer Duty: governance and evidencing outcomes
While progress under the Consumer Duty is acknowledged, the regulator is explicit that data, management information and governance arrangements across the sector remain insufficiently mature.
Firms are expected to:
- strengthen outcome focused MI and oversight at the senior management and board level
- act decisively where harm, poor value or customer detriment is identified
- embed consumer outcomes throughout product and service design, particularly for new or AI‑enabled propositions
- evidence effective identification, monitoring and support of customers in vulnerable circumstances
Supervisory focus is moving beyond initial Duty implementation towards continuous operational assurance. Firms that cannot demonstrate how outcomes are monitored, challenged and improved over time should expect increased supervisory engagement.
Fighting fraud and other financial crime
Fraud and financial crime remain core supervisory priorities, particularly as digital banking increases both scale and complexity.
The regulator expects retail banks to:
- continuously refine fraud, AML and financial crime controls in response to evolving threats
- remediate control weaknesses promptly and effectively
- support customers in understanding fraud risks and treat victims fairly
- invest in proportionate systems and controls, including advanced technologies where appropriate
Importantly, assessment is focused on end‑to‑end effectiveness, not simply control design. This includes the operational impact on customers, governance of escalation and exception handling, and how firms balance crime prevention with continued access to services.
Operational resilience and data security
Operational resilience and data security remain central to the regulator’s supervisory approach.
Firms are expected to:
- clearly identify important business services and impact tolerances
- map critical internal and third‑party dependencies
- remediate vulnerabilities within tolerance thresholds
- maintain resilience as operating models, suppliers and technologies continue to evolve
As reliance on outsourcing and partnership arrangements increases, boards must demonstrate that accountability, control and assurance remain firmly embedded within the firm.
What should retail banks do next
Boards should treat the retail banking regulatory priorities report as a practical supervisory benchmark, rather than a high‑level policy statement. In particular, they should:
- re‑test Consumer Duty evidence against evolving regulatory expectations
- review digital transformation decisions through a structured harm‑prevention lens
- stress‑test operational resilience frameworks, including third‑party oversight
- ensure senior executives have the authority and capacity to act decisively
Firms able to demonstrate how regulatory priorities translate into clear, repeatable operational control will be better positioned to reduce supervisory intervention and sustain regulatory confidence.
What this means in practice
Across all four priorities, the regulator is signalling a decisive move away from policy‑led compliance towards demonstrable delivery assurance. Retail banks and building societies are increasingly expected to evidence how regulatory expectations are embedded into day‑to‑day decision‑making, operational execution and governance oversight, in particular where digital transformation, third‑party reliance and financial crime controls intersect.
For many firms, the challenge is not interpreting regulatory intent, but having the capacity, governance maturity and delivery confidence to respond effectively as scrutiny intensifies.
In retail banking, this typically surfaces in:
embedding Consumer Duty monitoring into live product and service management
- evidencing harm assessments and outcomes arising from digital‑first operating models
- strengthening financial crime responses without introducing unintended customer detriment
- maintaining effective oversight across complex internal and supplier‑led delivery landscapes
TCC supports firms across this full regulatory spectrum by deploying senior interim leaders and regulatory specialists across governance, risk, compliance, transformation and operational resilience. This enables firms to strengthen oversight, close evidential gaps and maintain regulatory momentum at pace, without placing unsustainable pressure on permanent leadership and control functions.
As seen across other FCA priority regimes, institutions that can scale capability rapidly – while maintaining clear accountability and board‑level assurance – are best positioned to respond credibly to supervisory engagement and mitigate intervention risk.
TCC helps firms strengthen assurance, evidence outcomes and maintain regulatory momentum as scrutiny intensifies.