The Financial Conduct Authority published its annual Regulatory Priorities report for the payments sector on March 25, 2026, introducing agentic AI as a formal area of regulatory consideration for the first time. The regulator stated it will assess whether existing rules need to be changed or developed to accommodate AI systems that can autonomously initiate and execute payment transactions on behalf of users.
This is a departure from the FCA's established approach of applying existing frameworks to new technologies without targeted modification. Agentic AI in payments raises questions that current authorization and liability rules were not designed to answer: who bears responsibility when an AI agent initiates a fraudulent or erroneous payment, how existing strong customer authentication requirements apply to machine-initiated transactions, and whether current consumer protection frameworks adequately cover payments made by autonomous systems acting under delegated authority.
The report outlines four priority areas for 2026. The first is supporting innovation and growth, which alongside the agentic AI assessment includes advancing open banking, stablecoin regulation, and payments law modernization. The second is Consumer Duty implementation, with the FCA noting that transparency around international remittance pricing and treatment of vulnerable consumers remain areas where firms fall short. Third is safeguarding of customer funds, with the Supplementary Regime taking effect on May 7, 2026. Fourth is financial system integrity, covering anti-financial crime measures and firm resilience.
On stablecoins, the FCA has moved from consultation to active testing. Four firms were selected for a dedicated regulatory sandbox cohort in late 2025: Monee, ReStabilise, Revolut, and VVTX, each testing stablecoin issuance under proposed rules. A stablecoin tech sprint took place in March 2026 covering retail payments, cross-border transactions, e-commerce, and business-to-business use cases. The FCA will hold a trade payments roundtable in May 2026. Final policy statements on the broader cryptoasset regime, including stablecoin issuance rules, are expected later in the year, ahead of the October 2027 launch date for the full UK cryptoasset regulatory framework.
The safeguarding section of the report provides new data on the scale of funds at risk. Electronic money institutions safeguarded approximately 26 billion pounds in 2024, up from 11 billion pounds in 2021. Payment institutions safeguard an estimated 6 billion pounds per day. The FCA noted that between Q1 2018 and Q2 2023, failed payment institutions showed an average shortfall of 65 percent in customer funds. The new Safeguarding Supplementary Regime requires daily reconciliation of safeguarded funds, annual audits by qualified professionals, resolution pack maintenance, and monthly FCA returns. Firms with safeguarded funds below 100,000 pounds over a rolling 53-week period are exempt from the audit requirement.
The open banking section confirms the FCA will support the Treasury in establishing a permanent Future Entity for governance and in introducing legislation granting the FCA powers over a long-term regulatory framework. Consultation on this framework is planned for Q3 2026, with a policy statement expected in Q1 2027.
The payments report was the last of nine sectoral Regulatory Priorities reports the FCA published in 2026. It arrives during the most concentrated period of UK payments regulatory activity in recent years. On March 18, the FCA, PRA, and Bank of England jointly published a unified operational incident reporting regime requiring all UK-regulated financial firms and payment system operators to report through a single framework from March 2027. On May 7, the safeguarding regime takes effect. The FCA's consultation on open banking's permanent regulatory framework follows in Q3. For payment service providers operating in the UK, the compliance calendar for the next twelve months is the fullest it has been since the Payment Systems Regulator's creation in 2015.