KPMG Regulatory Barometer

October 2025

Welcome to the latest edition of the KPMG Regulatory Barometer — measuring the impact of regulatory policy and supervisory activity for financial services firms.

In today’s rapidly changing world, firms need to anticipate and plan for regulatory change across a vast agenda and with varying expectations across the globe. The Barometer helps to identify the key areas of pressure across the evolving UK and EU regulatory landscape.

In our March 2025 report, we highlighted the increasing pressures on financial regulators – including geopolitical uncertainty, government-led growth and competitiveness initiatives, the speed of digital innovation and a constantly evolving threat landscape – all of which translated into high and sustained pressure for regulated firms.

In this edition, we unpack the impact of the growth and competitiveness agenda on regulatory activity and regulated firms. We also feature a spotlight on private assets, an area of rapid growth which is of increasing concern to regulators, but also presents opportunities for firms.

As always, firms must remain agile in their analysis of regulatory change to ensure that they are on top of the latest expectations and adequately prepared to adjust approaches where necessary.

We hope you find the Barometer insightful — please reach out to the Regulatory Insight Centre if you would like to discuss any of the content in more detail.

The Barometer aggregate score for October 2025 has held at 7.3 but there have been changes in the underlying regulatory dynamics.

Rob Smith

Partner and Regulatory and Risk Advisory Lead

KPMG in the UK

Simplification not deregulation

The last 12 months have seen significant debate and political pressure in both the UK and EU around the impacts of financial regulation on economic outcomes. As we head into the final quarter of 2025, although the push for growth is arguably stronger than ever, we continue to view headlines around large-scale deregulation as premature.

Removing unnecessary burdens:

Significant deregulatory action is yet to materialise in the UK or EU. Measures introduced or trailed so far have largely been about removing duplicative requirements, improving the efficiency of regulatory and supervisory processes, and allowing for more proportionate approaches to support the growth of smaller firms.

Holding the line:

So far, there is little appetite from regulators to roll back key safeguards or compromise their independence. Prudential regulators highlight the value of robust regulatory frameworks in supporting growth and competitiveness, and do not wish to undermine financial stability. Conduct regulators still seek to deliver appropriate levels of protection around customers and market integrity. Levels of supervisory intensity continue to vary across regulators and sectors.

Responding to the growth agenda:

In our opinion, measures proposed to date have not been hugely impactful. At a local level, there are some small positive changes around the edges, but many firms, particularly larger firms, are yet to feel significant benefits from the simplification agenda. There is still considerable uncertainty over how regulatory adjustments will play out over time. However, there will be opportunities for firms to embrace innovation, and we expect culture to be more important than ever in upholding standards and “doing the right thing”.

Regulatory dashboard

For a snapshot of the key regulatory themes, including regulatory impact scores and high-level commentary, see the Dashboardopens in a new tab.

Sector views

How are regulatory developments impacting banks, insurers and wealth and asset managers?

Banking leaders are facing into a lower growth, high-cost environment where some traditional business models are under threat. There is a focus on growth (whether organic or through consolidation) and transformation initiatives, balance sheet optimisation and operational efficiencies. Initiatives such as the UK government’s Wholesale Financial Markets Digital Strategy and continued support for Open Banking and Open Finance aim to support the adoption of digital technologies. However, this could be a double-edged sword e.g. future wide-scale use of stablecoins and CBDCs could undermine banks’ traditional deposit base.

With continuing geopolitical and macroeconomic uncertainty, prudential regulators are holding firm on the need for robust financial and operational resilience in individual institutions and across the wider financial system. Evolving threats to financial stability from climate and nature-related risks, new technologies and the growing non-bank sector continue to be monitored closely. Concerns about the future of US regulation are driving a more proactive EU approach to supervising global banking entities, to protect the stability of EU markets.

Key elements of the conduct framework – disclosures, value, product governance and financial crime – will continue to require attention. The sophistication of fraud and scams is driving initiatives to raise awareness and improve financial literacy. And the FCA’s Motor Finance Redress Scheme and wider reforms to the UK redress framework may have significant implications down the line.

Political pressure on regulators to support growth and competitiveness have so far mostly delivered measures to support smaller banks and building societies, reduce administrative burdens and streamline regulatory processes e.g. authorisations. Bigger ticket regulatory change, e.g. on ringfencing, is yet to materialise.

Insurance leaders face a delicate balancing act: buoyed by near-term underwriting momentum yet navigating market conditions marked by low growth and a notably softening market globally.

Prudential regulators are alive to the potential consequences arising from broader uncertainty at both firm and system level. As a result, we have seen a doubling down on financial resilience oversight, including revamped approaches to life and general insurance stress testing, significant expansion in liquidity reporting requirements for life annuity writers in the UK and a concerted focus on ensuring that, if firms do need to exit the market, they can do so with minimum disruption to customers and the broader economic ecosystem.

Governments’ drive for growth means they are looking at life insurers and pension providers to make a meaningful contribution towards national infrastructure and investment objectives. Firms need to manoeuvre between political expectations, commercial reality and the regulatory scrutiny that comes with investing into less liquid or private assets.

In parallel, policymakers are keeping a close eye on the changing nature of the life insurance industry, including the increasing model of PE ownership and asset-intensive reinsurance.

General insurers, meanwhile, have the challenge of maintaining robust reserving in the face of claims inflation and catastrophe and cyber exposures, while hoping for an easing in reinsurance pricing.

All firms are united by the renewed focus on climate risk and ongoing prioritisation of fair value and oversight of product governance, claims and vulnerable customer outcomes.

Wealth and asset management executives are well versed in the current challenges facing the industry, including the fast-paced geopolitical environment, fee pressure and balancing investors’ desires on sustainability. However, regulators are creating opportunities too, stemming from a desire to increase retail investment, close the advice gap and facilitate the ability of retail investors to have exposure to private assets.

While prudential requirements are now largely stable and embedded, operational resilience remains a critical priority for firms and their clients.

Asset managers are increasingly being pulled into central banks’ plans for system-wide stress testing. The rapid growth of private asset managers is a contributing factor, with supervisors now shifting their attention from valuation to potential conflicts.

As investor sentiment around sustainability shifts, the simplification agenda for disclosures will be welcomed by all wealth and asset managers. However, firms will still need to have one eye on future requirements, including corporate reporting.

AI and tokenisation use cases are being explored at pace. A key challenge for firms in this area will be having a strategy and appropriate governance to roll out new technologies responsibly.

For consumer resilience, the focus is on embedding existing requirements ahead of potential EU reforms and changes to UK disclosures. There are also strategic choices for firms to make, for example, around whether and how to offer targeted support.

KPMG Regulatory Barometer

Firms must continue to align their strategies and approaches with regulators’ core priorities to build financially and operationally resilient business models and deliver good outcomes for consumers.

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Our people

Kate Dawson

Kate Dawson

Wholesale Conduct & Capital Markets, EMA FS Regulatory Insight Centre

KPMG in the UK

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Michelle Adcock

Michelle Adcock

Director, FS Regulatory Insight Centre, Risk and Regulatory Advisory

KPMG in the UK

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David Collington

David Collington

Wealth and Asset Management, EMA FS Regulatory Insight Centre

KPMG in the UK

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Alisa Dolgova

Alisa Dolgova

Insurance Prudential Regulation, EMA FS Regulatory Insight Centre

KPMG in the UK

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