What happened?
The Financial Conduct Authority has published its Regulatory Priorities: Payments report for March 2026, setting a clear supervisory agenda. Replacing traditional portfolio letters, this report is intended as a practical guide for boards and senior managers on where regulatory scrutiny will focus over the coming year.
The regulator is focusing on four key themes: preparing for future regulation and innovation, delivering the Consumer Duty, protecting financial system integrity, and keeping customer money safe. Scrutiny is shifting from theoretical compliance frameworks to robust, active evidence of day-to-day effectiveness.
Why does it matter?
This regulatory shift represents a direct transition towards outcome-based supervision. Payment firms must prove their compliance, particularly regarding pricing transparency, the treatment of vulnerable customers, and the security of client assets under the upcoming Safeguarding Supplementary Regime.
Failure to demonstrate effective governance, resilient safeguarding arrangements, and credible wind-down planning will lead to early intervention. Ineffective controls are now explicitly framed as systemic risks to market confidence and competition.
Who is affected?
This supervisory guidance directly affects senior executives, boards, and compliance teams at payment institutions, e-money firms, and FinTech innovators. Additionally, firms involved in open banking, variable recurring payments, and stablecoins are impacted as they scale up operations.
Key risks
- Safeguarding Failures: Inadequate asset protection or weak wind-down planning attracting direct regulatory intervention under the new regime.
- Consumer Duty Gaps: Ongoing weaknesses in international payments pricing transparency and the identification of vulnerable customers.
- Financial Crime: Weak internal systems and controls failing to prevent financial crime or support operational resilience.
Actions to take
- Review Safeguarding: Re-test and validate safeguarding frameworks and wind-down plans against the Safeguarding Supplementary Regime.
- Evidence Outcomes: Document ongoing Consumer Duty assessments, particularly around vulnerable clients and pricing transparency, for board-level review.
- Prepare for Reporting: Upgrade operational resilience and compliance systems to meet new incident and third-party reporting standards.
- Align Accountability: Ensure innovation initiatives like digital payments have clear risk ownership and robust governance controls.
Wider implications
The FCA is establishing a predictable yet demanding supervisory landscape. As payments firms continue to innovate, growth must be matched with equivalent regulatory maturity and robust internal governance controls.
Recommendations
Firms should proactively audit their existing compliance frameworks rather than waiting for regulatory inquiries. Bringing in expert external review or interim leadership can provide the necessary oversight and resourcing to implement required changes rapidly.
Supporting sources
Frequently asked questions
What is the purpose of the March 2026 payments report?
It replaces traditional portfolio letters with a single, practical guide detailing exactly where the FCA will focus its supervisory scrutiny for payment and e-money firms.
What are the primary areas of concern in safeguarding?
The regulator expects firms to demonstrate resilient safeguarding arrangements, robust governance, and credible, tested wind-down plans under the Safeguarding Supplementary Regime.
What is expected of payments firms regarding Consumer Duty?
Firms must show continuous assessment of their products and services, addressing weaknesses in pricing transparency and vulnerable customer treatment without delay.
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