- Increasing Focus on AI — AI developments and uses and the evolving legal and regulatory landscape may bring about new litigation and enforcement risks stemming from claims of algorithmic bias, discrimination, errors made by autonomous AI agents, fraud perpetrated using AI, misuse relating to privacy and governance, monitoring and reporting, and other areas. Evolving theories and claims, including those issues relating to information use and disclosure in the loan origination and other contexts may continue and reach across various products. Regulators may need to adapt the existing regulatory framework to meet these new challenges, creating new risks, while trying to strike a balance between a robust regulatory framework and flexibility to account for advances in technology. For example, in the United Kingdom, the Financial Conduct Authority (FCA) may not introduce additional AI regulations and might instead rely on existing frameworks, such as the UK's Consumer Duty principles. However, new regulations such as the EU AI Act and Colorado AI Act will impose additional requirements in implementing AI. In an effort to mitigate risk and satisfy legal and regulatory expectations, global companies may wish to consider applying adequate risk identification and management; designing and implementing proper controls and oversight systems; and ensuring customer disclosures are in place. Global businesses may need to adjust to the different regulatory frameworks and expectations across jurisdictions.
- Mass Arbitration — With the U.S. plaintiffs' bar fully incorporating mass arbitration into case strategy and leveraging fees and costs to extract settlements, mass arbitration filings may continue and become more widespread. Case law continues to develop as it relates to bellwether cases, pre-arbitration settlement conferences, and other conditions, with some judges in certain jurisdictions looking to invalidate these agreed-upon terms and others upholding them and enforcing the terms as written. Arbitral forums have begun building infrastructure to handle more mass arbitrations. These and other developments, along with pressure from those financing mass arbitrations and using investment models based on early resolutions by the plaintiffs' bar, may bring about a year of developments in this space. Increasing use and enforceability of litigation class action waivers in specific jurisdictions might also continue as an alternative path. While "mass arbitration" does not feature in the UK, further developments may occur in collective actions and redress schemes in the UK financial services industry in 2026. In particular, the English Court may hand down further decisions on what constitutes "reliance" by shareholders seeking to bring claims in relation to alleged misstatements or omissions in published material under the Financial Services and Markets Act 2000.
- Debanking and Other Regulatory and Enforcement Risks — Debanking initiatives may continue to intensify in the U.S. in 2026 with new legislation, regulatory action, and guidance. Federal agencies — including the Office of the Comptroller of the Currency (OCC) and the Small Business Administration (SBA) — may play a role in this quickly developing area, as may Congress, state "fair access" initiatives, and actions arising from the Guaranteeing Fair Banking for All Americans Executive Order. This new regime may create new litigation risks, while other purported "red-flag" activity based on reputational risks may cease to exist or lose significance going forward. In the UK and the EU, the Payment Accounts Directive provides a basic entitlement to a payment account only, but high-profile instances of debanking in the UK may result in banks becoming less bullish in newsworthy cases. New rules coming into force in the UK this year may also strengthen protections for customers around account closures. Understanding the impact of fair access/debanking initiatives and regulatory expectations may prove critical to risk management practices going forward. Other regulatory shifts and potential new risks in 2026 include an increased focus on anti-money laundering (AML) and sanctions with greater scrutiny on cross-border transfers involving high-risk jurisdictions and channels used to circumvent sanctions, particularly regarding state-linked actors. Complex fraud and Ponzi scheme risk may also continue in 2026.
- Crypto and Digital Assets — 2026 may be a pivotal year where integration of digital assets into mainstream finance creates opportunities, but it might also bring about the need for implementing bank-grade risk management. Potential risks include operational and cybersecurity threats, market volatility, financial crime, custody-related risks, compliance burdens due to fragmented global rules, and stablecoin-related liquidity challenges and new rules expected under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). As with AI, regulation may need to be sufficiently flexible to account for changes in technology. Therefore, we may see more outcomes-focused regulation for digital assets. In the EU, the Markets in Crypto-Assets (MiCA) regulation is already being implemented, while in the UK crypto assets will not be fully regulated until 2027. For those banks relying on third-party vendors to implement these crypto initiatives, oversight and security may require enhancements in risk management protocols, including but not limited to internal policy and procedural revisions. The pseudonymous nature of certain digital assets may create new risks of money laundering, terrorist financing, and various scams. Operating across jurisdictions may expose banks to varying rules, high compliance costs, and legal and reputational risks.
- Oversight of Wealth Management Sales Practices and Complex Product-Related Litigation — Increasing focus on financial institutions' wealth management sales practices related to complex products may occur in the U.S. for 2026, in line with new priorities from the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA). Robust SEC and FINRA oversight of wealth manager's fiduciary duties, sales practices in an expanding environment of product offerings, and core compliance programs may occur, including conflict management, best execution obligations, client disclosures, and consistency of recommendations with investor risk profiles. Risk may extend into FINRA arbitrations, as the plaintiffs' bar has increasingly sought to use the forum to bring wealth management-related cases typically understood as not being subject to FINRA jurisdiction, and to advance novel and expansive theories of liability in FINRA. In the UK, a new focus on customer outcomes and sales has been part of a wider FCA review that has resulted from an uptick in acquisitions and consolidation of wealth managers, sometimes involving private equity.
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