European Commission publishes its Annual Work Programme 2026 – a focus on financial services issues

RegCORE – Client Alert | Capital Markets Union + Savings and Investment Union

QuickTake

On 21 October 2025, the European Commission (the EC) published its 2026 Annual Work Programme (AWP) including annexes detailing legislative updates as well as a separate ‘strategic communication’ on “Europe’s Independence Moment”.Available here.Show Footnote The EC’s AWP continues to prioritise digital operational resilience, consumer protection and financial innovation alongside sustainable finance, risk assessment, securitisation, financial conglomerates, innovation facilitation and external credit assessment institutions.  While ongoing geopolitical tensions and the EU’s simplification plans shape the 2026 agenda, the AWP intensifies efforts on supervisory convergence and driving regulatory consistency across the financial sector, focusing on completing the Savings and Investment Union (SIU) and advancing the digital finance and payments agenda. 

This Client Alert explores the legal and regulatory implications of the EC's 2026 AWP for financial markets. It summarises headline priorities and strategic objectives, followed by a detailed analysis of anticipated changes and their practical implications for market participants. This Client Alert guides readers from high-level themes to specific sectoral impacts, providing a structured understanding of these developments.

This Client Alert should also be read in conjunction with our thematic deep dives on the reforms and developments addressed herein, as well as EU RegCORE’s standalone assessments of all relevant 2026 AWPs issued by the European Supervisory Authorities (EBA, ESMA and EIOPA), the Banking Union authorities (ECB-SSM and SRB) and the EU Anti-Money Laundering Authority (AMLA). Readers may also wish to consult PwC’s Risk Network publications and PwC Legal’s “Navigating 2026”, a comprehensive playbook that provides an annual outlook from EU RegCORE on the forthcoming regulatory policymaking agenda, supervisory cycle and cross-cutting themes and trends for 2026 and beyond.

Key takeaways for financial market participants from the EC’s 2026 AWP

The EC’s 2026 AWP, its annexes and the strategic communication on “Europe’s Independence Moment” collectively signal a concerted push to complete the EU’s SIU plans by 2028, modernise the retail and capital markets rulebook and hard wire “digital sovereignty” through horizontal acts (Cloud and AI, Quantum, Advanced Materials) and simplification. For financial services, the most immediate touchpoints are:

• Continued legislative processing of the payments package (PSD3/PSR), digital euro (including non‑euro Member State provisions) and the Financial Data Access framework (open finance).
• Securitisation proposals amending the STS framework and CRR capital treatment.
• Retail Investment Strategy proposals affecting MiFID II, UCITS/AIFMD, Solvency II and IDD, alongside PRIIPs KID modernisation.
• New initiatives slated for 2026 on shareholder rights (Q4 2026) and the European venture capital funds Regulation (Q3 2026).
• Better regulation push: simplification, reduced reporting burden (especially for SMEs) and Shareholder Rights Directive evaluations (Q4).
• The proposal to withdraw the legacy financial transaction tax (FTT) initiative.
• An explicit commitment to complete the remaining proposals to “complete the Savings and Investment Union” and deliver a “comprehensive analysis on competitiveness in our banking sector”.

Regulated firms should expect incremental but material changes across disclosure, product governance, data access and portability, prudential treatment of securitisation, payments conduct and fraud controls, ICT governance linkages to DORA and potential adjustments to capital markets infrastructures as open finance and payments reforms advance. These changes translate into tangible compliance and strategic planning impacts over 2025–2026 for firms operating in the EU, particularly in the following areas:

Capital markets and prudential reforms

• Securitisation reform: Proposals to amend the general framework for securitisation (STS and non‑STS) and adjust CRR requirements for securitisation exposures are on the legislative track. Firms should expect recalibration of risk weights, due diligence and disclosure templates, with knock‑on effects for bank capital, structuring and investor reporting.
• Shareholder rights: An evaluation is scheduled (Q4 2026) and an update of rules on shareholder rights is planned (Q4 2026). Firms can expect modernisation around voting, engagement and transparency, possibly harmonising cross‑border processes and strengthening retail participation.
• EuVECA: Updates to the European venture capital funds Regulation are planned (Q3 2026). Expect expanded eligibility and investment flexibilities, with ramifications for fund manager permissions and product design.

Retail investor protections and disclosure reforms

• Retail investor package: Pending proposals to amend UCITS, Solvency II, AIFMD, MiFID II and IDD seek consistent retail protections, inducement rules and product governance are set to be advanced. Firms should anticipate enhanced suitability/appropriateness frameworks, clearer disclosures and possible inducements constraints.
• PRIIPs KID modernisation: The proposal to update the Key Information Document aims to improve comparability and performance narratives. This may require firms to re-tool templates, methodologies and systems for KID production across banking, insurance‑based investment products and asset management.

Payments, data and digital

• Payments package (PSD3/PSR): The pending proposals on payment services and electronic money services (PSD3), together with the new Regulation on payment services in the internal market (PSR), reinforce fraud prevention (including authentication), transparency and competition. Significant operational changes are expected for payment institutions (PIs), e-money issuers (EMIs), payment service providers (PSPs), card schemes, acquirers and PIs/EMIs.
• Digital euro: The two existing proposals (core Regulation and services for non‑euro Member State PSPs) remain pending. Even prior to issuance of a digital euro, firms should consider liquidity, settlement, AML/CFT and wallet design assumptions, plus potential impacts on retail deposits and merchant acquiring.
• Financial Data Access (open finance): The pending framework for financial data access interfaces with DORA. Firms should expect compulsory data sharing for defined financial datasets, enforceable data access rights and governance requirements for “data holders” and “data users”. This will likely affect banks, insurers, investment firms and fintech aggregators, with strong implications for APIs, data minimisation and customer consent frameworks.
• Cloud and AI Development Act: A horizontal instrument planned for Q1 2026 is expected to reshape standards and obligations around cloud and AI deployment. Financial services firms should anticipate alignment points with DORA’s ICT risk management, outsourcing oversight and model risk controls, particularly for AI‑enabled credit, trading as well as customer interfaces.

SME/small mid‑cap simplification

• MiFID II and critical entities resilience (CER) adjustments: A proposal amending MiFID II to extend certain mitigating measures for SMEs to “small mid‑caps” and further simplifications is on track. Relevant firms may wish to forward-plan for targeted alleviations (e.g., research unbundling flexibilities, IPO on‑ramp type measures, lighter issuer reporting in specified contexts) intended to improve public markets access without diluting retail protections.

Horizontal “simplification” and better regulation

• The EC’s simplification thrust targets a 25% burden reduction overall and 35% for SMEs, with omnibus measures and reality‑check dialogues. Market participants should prepare for the method to be applied to reporting regimes (e.g., harmonising templates, removing duplicative reports), permitting for cross‑border operations and aligning sector frameworks with proportionality—while the EC stresses no lowering of standards.

SIU, competitiveness and simplification

The EC signals an intent to “complete the Savings and Investment Union”, including initiatives such as:

• Strengthening shareholder rights (new initiative in Q4 2026) and evaluating the Shareholder Rights Directive (Q4 2026).
• Updating the European venture capital funds (EuVECA) Regulation (Q3 2026).
• Screening and withdrawing proposals that are misaligned with priorities, including withdrawal of the enhanced cooperation FTT proposal.

The programme embeds a “simplification drive” (cutting administrative burdens, especially for SMEs and “small mid‑caps”), systematic use of proportionality and streamlined reporting. For financial services, this will interact with disclosure, supervisory reporting and documentation requirements under sectoral rulebooks.

Banking sector competitiveness

The AWP promises “a comprehensive analysis on competitiveness in our banking sector”. Firms can expect supervisory and regulatory refinements aimed at efficiency, scale and market integration (complementing ongoing CRR/CRD reforms and CMU measures) and potential re‑examination of obstacles to cross‑border consolidation and secondary market functioning.

Notable items the EC chose to de prioritise

Given the EC’s stated intention to withdraw the enhanced cooperation FTT proposal, contingency planning for an EU level financial transaction tax can be de emphasised unless the initiative is revived in a different form. 

Practical implications of the AWP for regulated firms

The EC’s dual focus on completing the SIU and embedding digital sovereignty, despite simplification promises, will still elevate compliance standards across several domains. These changes also present opportunities in data driven services and capital markets intermediation for early movers. Proportionality and simplification should be interpreted as a move towards fewer, clearer reports and processes, not a relaxation of controls. Early execution in open finance and payments will likely be a competitive differentiator and mature, DORA aligned governance will be crucial to absorb forthcoming horizontal digital legislation without costly rework.

Practical implications by sector:

Banks and investment firms

• Prudential. Firms should reassess securitisation pipelines and risk transfer structures to reflect expected capital impacts and firms should refresh investor disclosures to address revised prudential assumptions.
• Prudential. Firms may want to run parallel capital and RWA scenarios to test sensitivity to securitisation and related CRR changes.
• Conduct and distribution. Firms should remap inducements policies and suitability and appropriateness processes to tighter retail frameworks and firms should upgrade PRIIPs KIDs and pre contractual disclosures.
• Conduct and distribution. Firms may want to pilot revised distributor oversight and attestations to evidence compliance.
• Data and digital. Firms should build open finance APIs and consent tooling and firms should reinforce DORA consistent ICT governance for cloud and AI use cases and firms should enhance payments fraud controls aligned with PSD3 and PSR.
• Capital markets. Firms should monitor SME and small mid cap adjustments under MiFID II and firms should upgrade issuer services and research offerings and firms should prepare for changes to shareholder rights processes.

Payment institutions and e‑money issuers

• Compliance uplift. Firms should strengthen strong customer authentication and fraud reporting and firms should enhance incident management to meet PSD3 and PSR expectations.
• Data access. Firms should calibrate lawful basis and consent granularity and data minimisation for open finance and PIS and AIS models.
• Data access. Firms may want to establish data sharing governance forums with key partners to standardise consent flows and dispute handling.
• Digital euro readiness. Firms should assess operational capability for distribution and AML and CFT workflows and user interfaces and firms should evaluate impacts on fees and settlement and liquidity management.

Asset managers and insurers

• Retail distribution. Firms should update retail frameworks to reflect harmonised investor protections and disclosures and firms should implement PRIIPs changes across IBIPs and funds.
• Product governance. Firms should strengthen target market definition and value assessment and conflicts management and firms should factor potential inducements constraints into distribution economics.
• Data and AI. Firms should implement controls for model use in portfolio construction and advice and firms should enhance supplier assurance for cloud and firms should use open finance personalisation opportunities consistent with data protection obligations.

Market infrastructures and custodians

• Voting and shareholder communications. Firms should invest in interoperable messaging standards and auditability and traceability to support streamlined cross border processes.
• Payments and settlement. Firms should prepare technical and operational integrations for the digital euro and firms should assess collateral and liquidity and intraday funding impacts.
• Data pipelines. Firms should align resilience and incident reporting and third party risk management with DORA and open finance and firms should strengthen data lineage and recovery capabilities.

Cross‑cutting themes for all sectors

Across the sector, simplification and proportionality may offer opportunities to streamline reporting and compliance processes and firms should actively map current obligations to identify candidates for standardisation or removal as omnibus measures progress. At the same time, the better regulation agenda will be paired with firmer enforcement, increasing the premium on demonstrable effectiveness of control frameworks.

The digital sovereignty strand, anchored in the Cloud and AI Development Act, necessitates careful assessment of cloud strategies, data residency, AI use cases and third party risk management, coordinated with DORA. For firms serving SMEs and small mid caps or supporting their access to capital markets, the facilitation measures envisaged under the SIU umbrella may create new pathways and mitigations that warrant early engagement with issuers, advisers and market infrastructure providers.

Timelines

The legislative pipeline from 2025 will continue through trilogues into 2026 and several high impact files—notably the payments package, retail investor reforms and open finance—are already well advanced. The 2026 AWP adds new legislative initiatives, including the Cloud and AI Development Act and updates to capital markets and sets hard deadlines for evaluations and simplification deliverables. Application dates are likely to be phased, with transitional regimes. Firms should therefore plan for layered compliance programmes rather than a single implementation event. This includes notably the following

• New initiatives in 2026: update of shareholder rights (Q4), EuVECA (Q3), antitrust procedures (Q3), taxation omnibus (Q2). These are not yet proposed texts and will follow the usual impact assessment and legislative path.
• Evaluations in 2026: Shareholder Rights Directive (Q4). Evaluations can lead to further proposals or guidance changes.
• Pending proposals already with COM numbers: PSD3/PSR, digital euro (and non‑euro service provision), Financial Data Access, Retail Investment Strategy, PRIIPs KID modernisation, securitisation (STS and CRR) and capital markets SME simplification measures. Firms should plan for possible adoption in late 2025–2026 and phased application thereafter.
• Withdrawals within six months: notably the legacy FTT proposal under enhanced cooperation.

Firms will want to also consider the below as part of their planning:

Outlook

The 2026 AWP, together with annexes and pending proposals, points to material change in the EU financial services landscape over the next 12–18 months. The agenda concentrates on completing the SIU, modernising retail protections and disclosures, advancing digital payments and open finance and easing compliance burdens. Regulated firms should update horizon scanning and implementation plans now—particularly for PSD3/PSR, open finance, retail investor measures, securitisation and shareholder rights—while positioning to use the simplification track to streamline reporting and controls.

In execution terms, many firms may want to review how they map pending files to business lines and concrete obligations, assign accountable owners and track milestones across payments, data access, retail investor rules, securitisation and shareholder rights. Conducting targeted gap assessments for open finance data-access duties and PSD3/PSR fraud and transparency standards will help sharpen investment priorities. Retail manufacturers and distributors should prepare for revised PRIIPs KID production and broader disclosure changes and recalibrate product governance and distributor oversight. Securitisation participants should run capital scenarios under the proposed CRR changes and reassess STS eligibility and process controls. Some firms may want to stand up an internal working group to track the 2026 initiatives on shareholder rights and EuVECA, feeding outputs into corporate governance and capital raising strategies. In parallel, a number of firms may want to consider how the make use of the simplification drive by inventorying reporting requirements and flagging items for standardisation or relief.