The FCA has published its latest Perimeter Report outlining the areas where it says regulation needs to evolve to protect consumers, support innovation and maintain market integrity. The perimeter defines what the FCA does and doesn't regulate, and this year's report focuses heavily on the impact of technological change and AI-driven business models and gaps that expose consumers or markets to harm. The report makes the following headline points:

New and emerging regulatory areas are expanding the perimeter

The FCA highlights progress on several fronts:

  • BNPL (Deferred Payment Credit) will soon fall under FCA oversight.
  • Cryptoassets: Seven new regulated activities are now in scope under the Treasury's February 2026 Crypto RAO, with further legislative reform needed around crypto resolution.
  • Targeted Support regime comes into force in April, allowing firms to give "group‑based" guidance instead of individual advice.
  • ESG ratings providers will fall within the FCA's remit from June 2028.

Key areas for reform

The FCA identifies key areas where legislative change is needed, including:

  • Critical Third Parties (CTPs): Cloud and tech providers underpinning multiple firms create systemic risks; designation of CTPs is expected within the next 12 months.
  • SM&CR extension: Current exclusions (e.g. credit rating agencies, Recognised Investment Exchanges, payments and e‑money firms) undermine accountability. The FCA supports bringing them in scope.
  • Overseas Persons Exclusion: Limited visibility over overseas firms serving UK clients remains a concern; enhanced information powers are requested.
  • Payments framework reform: Legislation needs modernising for tokenised payments, stablecoins and AI‑driven "agentic" payments.

Digital harm and AI‑driven risks are rising

The FCA is increasingly concerned about AI‑generated content, influencer promotions and fraud exploiting online platforms:

  • The Online Safety Act is a key tool, but loopholes, particularly around user‑generated, influencer‑sponsored adverts, are impeding enforcement.
  • The FCA calls for stronger obligations on tech platforms and improved cross‑regulator information sharing.

Consumer protection boundaries need clarifying

Misunderstandings around regulated versus unregulated activities create consumer harm:

  • New types of occupational pension schemes may challenge existing legislative definitions.
  • Despite stakeholder pressure, the FCA cannot mandate provision of wider banking services beyond access to cash, reflecting statutory limits.

The FCA will press for reform during 2026

In January 2026, the FCA wrote to the Treasury Select Committee setting out priority areas for legislative change. It commits to ongoing analysis and recommendations aimed at making sure that the perimeter keeps pace with market developments and supports a dynamic, competitive financial system.

FCA perimeter report 2026: key takeaways

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