European

ECB President calls for stronger regulation and supervision of non-banks and a simplification of the regulatory framework across the banking sector

On 3 October 2025, the President of the European Central Bank (ECB), Christine Lagarde, delivered the keynote speech at the farewell symposium for the President of the De Nederlandsche Bank. Among the points Lagarde made are:

• Non-banks operate under far lighter rules compared with the banking sector.
• It is vital that policymakers adapt regulation and supervision, but by levelling them up for non-banks that are involved in bank-like activities, or with significant links to the banking sector.
• Such levelling up would help to address banks’ concerns about their competitiveness vis-à-vis non-banks as a result of the current uneven playing field. Enhanced supervision of non-banks would also make potential (or hidden) financial stability risks more visible.
• It is a good moment to take stock and assess how regulation can be simplified to avoid duplication and unnecessary burdens on financial institutions. In this respect, the ECB High-Level Task Force on Simplification is exploring how to reduce undue complexity in selected aspects of the capital structure, reporting and supervision, while also maintaining the resilience of banks and fostering greater integration and harmonisation in EU frameworks.

The full speech can be read here.

EBA work programme for 2026 published

On 1 October 2025, the European Banking Authority (EBA) published its work programme 2026, setting outs its priorities for 2026 and its planned activities relating to those priorities. There are three overarching priorities under which the EBA’s regulatory and supervisory activities are outlined. These are summarised below.

• Rulebook - contributing to an efficient, resilient and sustainable single market.
• Risk assessment - developing capacity for effective analysis.
• Innovation - enhancing technological capacity for all stakeholders.

The work programme can be accessed here.

European Commission letter to ESAs and AMLA on de-prioritising certain Level 2 measures

On 6 October 2025, the European Commission published a letter which it sent to the Anti-Money Laundering Authority (AMLA) and the European Supervisory Agencies (ESAs), comprising the EBA, the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities Market Agency (ESMA). The letter set out certain non-essential Level 2 acts relating to financial services that it is deprioritising until 1 October 2027.

The Level 1 acts adopted by the co-legislators between 2019 and 2024 have empowered the Commission to adopt 430 Level 2 acts, which have been divided into three categories of empowerments where the Commission is:

• legally required to act within a specified timeframe
• legally required to act without a specified timeframe
• not legally required to act

The Commission considers 115 Level 2 measures as non-essential for the effective functioning of the Level 1 legislation and for the achievement of EU policy objectives. These Level 2 measures are set out in an annex to the letter and the Commission will not adopt the acts listed before 1 October 2027. The Commission will propose to amend or repeal the empowerments for the non-essential Level 2 acts where there is an obligation to act within a specified deadline in the context of any ongoing amendments of relevant Level 1 acts.

The letter and annex can be accessed here and here, respectively.

FCA launches a public consultation on the motor finance compensation scheme

On 7 October 2025, the Financial Conduct Authority (FCA) announced a consultation on an industry-wide scheme to compensate motor finance customers who were treated unfairly between 2007 and 2024. The scheme would cover regulated motor finance agreements taken out between 6 April 2007 and 1 November 2024 where commission was payable by the lender to the broker.

The Financial Ombudsman and courts consider complaints from 6 April 2007 and therefore firms’ liabilities arising from their breaches of the law and regulation already exist. The end date is based on when we know firms moved to more transparent practices following the Court of Appeal judgment on 24th October 2024 that was subsequently appealed to the Supreme Court. The FCA states the majority of motor finance agreements will not qualify for compensation. However, they estimate 14.2m agreements - 44% of all agreements made since 2007 - will be considered unfair because they involve inadequate disclosure of one or more of the following:

• a discretionary commission arrangement
• high commission (where the commission is equal to or greater than 35% of the total cost of credit and 10% of the loan)
• contractual ties that gave a lender exclusivity or a right of first refusal

The FCA estimates there are already just over four million complaints with firms. The FCA has encouraged lenders contact consumers who complained before the scheme starts within three months. They will be included in the scheme unless they opt out. If consumers opt out of the scheme, they cannot opt back in.

The consultation on the proposed redress scheme closes on 18 November 2025. If the FCA introduce a redress scheme, they will expect to publish a policy statement and final rules by early 2026.

The consultation can be accessed here.

EBA reports on AML/CFT supervision of EU banks by national competent authorities

On 8 October 2025, the EBA published a report on the progress by national competent authorities (NCAs) to address feedback and recommendations in respect of their approach to anti-money laundering and countering the financing of terrorism (AML/CFT) supervision in the EU banking sector.

Between 2018 and 2024, the EBA conducted reviews of the effectiveness of 40 NCAs in their approach, following which, the EBA provided bilateral feedback to the NCAs and, where necessary, made recommendations on the steps they could take to improve.

The report, along with four summary reports published after each review, will be part of the EBA’s handover to the new AMLA. The reports provide AMLA with an up-to-date view of the state of AML/CFT supervision in the EU and form a basis for indirect AML/CFT supervision that will transfer to AMLA in the future.

Some of the points the report outlines are as follows:

• NCAs have taken notable steps to align national strategies and practices with the EBA standards
• supervisory manuals have been enhanced to ensure that AML/CFT supervision becomes more consistent and effective
• most NCAs have taken significant steps to use all supervisory tools available to them in a more strategic way
• NCAs made substantial efforts to strengthen coordination and information exchange with the relevant public authorities within their respective Member States, such as competent authorities with shared supervisory responsibilities, the financial intelligence unit and tax authorities
• significant progress has been made in relation to establishing sound and effective communication with competent authorities in other EU jurisdictions or third countries

The report can be accessed here.

EBA reports on white labelling in banking and payments

On 14 October 2025, the EBA published a report on white labelling. The report sets out the key features of white labelling, provides an overview of use cases and identifies potential opportunities and risks.

The key findings include:

• over a third (35%) of banks surveyed in 2025 use a white labelling business model
• traditionally, partners under a white labelling business model were also financial institutions but, increasingly, they are non-regulated commercial entities (e.g. those operating online marketplaces)
• white labelling is being driven by digitalisation and platformisation that create new ways for people to access financial services

The EBA will take follow-up actions in 2026 to promote a common supervisory approach towards these business models and improve consumer understanding, which includes:

• raising supervisory awareness
• having integrated white labelling included in competent authorities’ supervisory priorities for 2026
• ensuring more effective disclosures to consumers to facilitate their awareness as regard the firm they are dealing with and how to make complaints

The report can be accessed here.

EBA report on supervisory convergence in 2024

On 15 October 2025, the EBA published a report on convergence of supervisory practices in 2024, which details the EBA’s efforts to strengthen the alignment of supervisory approaches across Member States for areas under its remit (prudential, resolution, consumer protection, digital finance and AML/CFT).

The report is a first step in implementing recommendation 17 in the EBA’s report on the efficiency of the regulatory and supervisory framework in which the EBA committed to providing a more detailed account of supervisory convergence in the EU. Going forward, the EBA will increase its focus on supervisory outcomes to ensure consistent and robust supervision across the EU. 

Highlights noted in the report include:

• Prudential supervision: stable risk levels across the areas of liquidity and funding risk, interest rate risk and hedging, and recovery operationalisation. It identified on-going challenges relating to data quality, stress testing scenarios and modelling assumptions. The EBA will continue to monitor risks related to online deposit platforms and compliance with ‘Supervisory Outlier Tests’ in 2025.
• Resolution and crisis management: significant progress has been made in operationalising resolution tools, particularly the bail-in mechanism in cross-border environments. It also highlights improved co-ordination among authorities and stakeholders, enhanced management information systems and ongoing efforts to address challenges in data quality and legal recognition of bail-in actions.
• Digital finance: EBA prioritised preparations for the implementation of the Markets in Crypto Assets Regulation, focusing on supervision of issuers of asset reference tokens and e-money tokens. It also notes that the EBA developed an EU-wide supervisory handbook and co-ordinated workshops to ensure convergence in supervisory approaches from the outset.
• Consumer protection and AML/CFT: improved co-operation and risk-based supervision among national supervisory authorities, with notable progress made through AML/CFT college monitoring and implementation reviews. The EBA is preparing for the transition of AML/CFT supervisory responsibilities to the new Anti-Money Laundering Authority at the end of 2025.

The report can be accessed here.

SRB launches consultation on communication guidance for banks

On 17 October 2025, the Single Resolution Board (SRB) launched a consulation on draft operational guidance for banks on communication and a draft communication testing supplement to its current operational guidance on resolvability testing for banks.

The updates are intended to support crisis preparedness by clarifying expectations for timely and coordinated communication with stakeholders when banks are failing or likely to fail. The guidance is part of the SRB’s engagement with industry to improve crisis readiness and builds on the SRB’s ‘Expectations for banks’.

The consultation closes on 12 December 2025 and can be accessed here.

EBA consults on revised guidelines on the SREP and supervisory stress testing

On 24 October 2025, the EBA launched a public consultation on revised guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing. The revision forms are part of the EBA’s ongoing efforts to simplify and enhance the efficiency of the supervisory framework for EU credit institutions, while supporting a risk-focused and effective supervision.

The proposed revisions bring changes across all the main SREP elements and enhance proportionality aspects, taking into account the peer review on the application of proportionality in the SREP and the relevant recommendations of the EBA’s Advisory Committee on Proportionality. The revisions also encompass the new CRD 6 mandates on the output floor and third-country branches, align with the interest rate risks for the banking book and credit spread risk arising from the non-trading book activities package and incorporate ESG factors and operational resilience in line with the framework under the Digital Operational Resilience Act.

The EBA will hold a virtual public hearing on 4 December 2025 from 10am to 12pm Paris time. This link can be used to register for the hearing by 1 December 2025.

The consultation period will end on 26 January 2026.

ECB speech outlines expectations for banks' boards in a changing risk landscape

On 27 October 2025, the ECB published a speech by Anneli Tuominen, Member of its Supervisory Board, that the risk oversight of EU banks’ boards must evolve as fast as the risks related to the digitalisation of banks’ business models. This comes in light of the current environment in which cyber, and information and communication technology (ICT) risks, geopolitical risks and hybrid threats are no longer peripheral but are intensifying alongside traditional credit, market and liquidity risks and against a backdrop of elevated market uncertainty.

As a consequence, Tuominen stated that the demands placed on banks’ boards have risen as the risk environment has become more complex and uncertain, and he outlined the qualities that banks’ boards need to have to thrive in this environment - these are outlined below under three overarching themes.

• a sound knowledge base and robust “awareness” to guard against risks
• strong communication and investing in franchise value to avoid reputational risks
• navigating the trade-off between adaption and innovation

In 2026, the ECB will conduct a thematic stress test in the form of a reverse stress test on geopolitical risk, which will explore which geopolitical shocks and transmission channels could most severely affect banks’ profitability and solvency. This will help to identify bank-specific vulnerabilities and challenge assumptions about risk exposures, providing important input to the dialogue between banks and supervisors on contingency planning and risk management.

RTS on positions and RTS on the use of alternative internal models and subset of the modellable risk factors published in the OJ

On 14 October 2025, two Commission delegated regulations containing RTS under the Capital Requirements Regulation (CRR) (as amended by CRR III) were published in the Official Journal of the EU:

• Commission Delegated Regulation (EU) 2025/1265 - RTS specifying the method for identifying the main risk driver of a position and for determining whether a transaction represents a long or a short position as referred to in Articles 94(3), 273a(3) and 325a(2)
• Commission Delegated Regulation (EU) 2025/1311 - RTS specifying the conditions for assessing the materiality of extensions of, and changes to, the use of alternative internal models, and changes to the subset of the modellable risk factors

Both delegated regulations entered into force on 3 November 2025.

EBA Work Programme for 2026 published

On 1 October 2025. the EBA published its work programme 2026, setting outs its priorities for 2026 and its planned activities relating to those priorities. There are three overarching priorities under which the EBA’s regulatory and supervisory activities are outlined. These are summarised below.

• Rulebook - contributing to an efficient, resilient and sustainable single market.
• Risk assessment - developing capacity for effective analysis.
• Innovation - enhancing technological capacity for all stakeholders.

The work programme can be accessed here.

European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) (Amendment) (No. 2) Regulations 2025 published

On 3 October 2025, the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) (Amendment) (No.2) Regulations 2025 (S.I. No. 440/2025) were published.

The Regulations amend provisions of the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (S.I. No. 194/2021) to give further effect to Article 31 of Anti-Money Laundering and Terrorist Financing Directive (AMLD) 4 as amended by Article 1(16) of AMLD 5. They introduce new obligations on designated persons in relation to circumstances where details regarding a relevant trust have not been registered in the Central Register of Beneficial Ownership of Trusts.

The Regulations came into force on 1 October 2025 and can be accessed here.

Date published: 25 November 2025

This publication provides an overview of certain legal and regulatory developments that may be of interest to certain entities. It does not purport to provide analysis of law or legal advice and is strictly for information purposes only.