Regulatory Updates April 2026

Our regulatory newsletter aims to provide insight into the changes and updates which may have an impact on your firm. At Objectivus we are well positioned to provide context and support for firms working to understand such changes.

In this issue we cover:

• FCA sets out next phase of smarter and more effective regulation

• FCA review of customer due diligence practices
• FRC guidance on AI adoption in audit

• FCA enforcement and regulatory focus: financial crime and AML

FCA sets out next phase of smarter and more effective regulation

 

The Financial Conduct Authority (FCA) has outlined its next phase of regulatory reform, focused on building a more flexible and outcomes-based framework. This continues the shift away from prescriptive rules toward a model that places greater responsibility on firms to deliver good consumer outcomes. Key themes include streamlining existing rules to reduce complexity, improving regulatory efficiency and responsiveness; supporting innovation while maintaining market integrity and enhancing proportionality across different firm types. This signals a continued evolution of the FCA’s regulatory approach, with firms expected to demonstrate stronger internal governance and accountability rather than relying solely on detailed rule adherence.

FCA review of customer due diligence processes and controls

 

The FCA has published findings from its review into firms’ customer due diligence (CDD) frameworks, identifying both good and poor practices across the sector. The review highlights that stronger firms demonstrated clear risk-based approaches with effective escalation and documentation, while weaknesses included inconsistent application of enhanced due diligence and gaps in ongoing monitoring, alongside insufficient governance and oversight in weaker firms. This reinforces the FCA’s continued supervisory focus on anti-money laundering controls and the need for firms to maintain robust, well-documented financial crime frameworks. Firms should assess their CDD processes against these findings and ensure alignment with regulatory expectations.

FRC publishes guidance on AI adoption in audit

 

The Financial Reporting Council (FRC) has released new guidance to support audit firms in adopting emerging AI technologies. This guidance focuses on governance and oversight of AI tools in audit processes, managing risks related to accuracy, bias and explainability, ensuring audit quality is maintained when integrating AI, and clarifying responsibilities when using automated systems. The publication reflects increasing regulatory attention on how firms deploy advanced technologies, particularly in high-assurance environments such as audit. Firms exploring AI-enabled tools should ensure appropriate controls, documentation and validation frameworks are in place.

FCA enforcement and regulatory focus: financial crime and AML

 

Regulatory and enforcement focus on financial crime continues to intensify, with anti-money laundering (AML) remaining a central priority for UK authorities. Analysis from industry sources indicates that financial crime currently dominates the FCA’s enforcement activity, accounting for a significant proportion of investigations in recent years.

The government and the FCA are expected to introduce further measures to strengthen oversight and raise standards across the financial system. This includes reforms to the Money Laundering Regulations, increased supervisory coordination and enhanced expectations around firms’ risk-based controls and governance frameworks.

The evolving risk landscape, particularly the growing use of financial technologies, crypto assets and complex cross-border structures. Regulators are therefore placing greater emphasis on firms’ ability to identify, assess and mitigate these emerging risks effectively.

In this environment, firms should prioritise strengthening their AML frameworks, ensuring robust customer due diligence, improving data quality and monitoring capabilities and maintaining clear senior management accountability for financial crime controls.

Please contact us at info@objectivus.com if you have any questions or require further clarity on any of the points raised.