United Kingdom's HM Treasury sets 2026 remit prioritizing bank capital reforms and home ownership

HM Treasury has published the 2026 remit for the Bank of England's Financial Policy Committee (FPC), calling for prompt delivery of previously announced bank capital reforms and greater access to home ownership without prejudicing financial stability. The recommendations also prioritize systemic risks from nonbank finance, core sterling markets and emerging technologies. The capital reforms cover the leverage framework and the usability and releasability of capital buffers. The next stage of the capital review should deliver further proposals, particularly to address overlapping requirements relating to domestic exposures. Following last year's decision to give firms flexibility to provide more mortgages with high loan-to-income (LTI) ratios, the FPC should consider how the LTI framework can better support access to home ownership. Financial stability priorities include strengthening nonbank financial institutions and associated markets, examining private market risks using insights from the private markets System-Wide Exploratory Scenario exercise, and reinforcing gilt and gilt repo markets. Analysis of artificial intelligence should cover cyber and operational risks from frontier models, agentic applications, and risks from financing AI investment and its links to credit markets. The FPC should also monitor the operation of the critical third parties regime, including potential concentration risks across the financial system. Climate analysis should consider physical and transition risks, their interaction with nature, and appropriate scenarios and time horizons in stress testing.