5 Steps to Protect Your Financial Services Business in 2026

April 10, 2026

Running a financial services business in the UK means handling sensitive client data, moving money and meeting strict regulatory standards. If you want to protect your financial services business from fraud, cyber attacks, sanctions breaches and regulatory fines, compliance and security must be built into daily operations rather than treated as an afterthought.

UK Finance’s 2024 Annual Fraud Report showed that financial fraud losses across the UK payment industry reached £1.17 billion in 2023, with authorised push payment fraud alone costing customers £459.7 million. The Financial Conduct Authority (FCA) has also made clear that firms must report material cyber incidents quickly and maintain robust operational resilience. For women-led firms, where capital and reputation can be harder to rebuild, these risks carry extra weight.

Here are five practical steps to strengthen your defences in 2026.

1. Put sanctions and anti-money laundering screening at the centre

Sanctions compliance is not optional for UK financial services firms. The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, enforces UK financial sanctions and can impose substantial civil monetary penalties for breaches. In 2024, OFSI fined Standard Chartered Bank £20.47 million for breaches of Russian sanctions, the largest penalty of its kind at the time. The case showed that even large institutions face serious consequences when screening fails.

For a smaller firm, the reputational and financial damage can be terminal. You should:

Screen clients, beneficial owners and transactions against UK, UN and EU sanctions lists before onboarding and at regular intervals.
Use automated sanctions screening tools that update in real time when lists change.
Document your risk assessment and keep an audit trail for the FCA or OFSI.
Train staff to recognise red flags associated with money laundering and sanctions evasion.

If you are a director, you should also ensure your identity is verified with Companies House, since accurate director records feed into due diligence and Know Your Customer checks. Read our guide on Companies House identity verification for female directors.

2. Strengthen cyber resilience beyond basic firewalls

Cyber attacks on financial services firms continue to rise. The FCA has warned that ransomware, phishing and supply chain attacks remain the most common threats, and it expects boards to take direct responsibility for cyber resilience. Basic firewalls are no longer enough.

A practical cyber resilience framework should include:

Multi-factor authentication (MFA) on all systems that hold client or payment data.
Encryption of data at rest and in transit, especially for emails and file transfers.
Regular backups stored offline or in a separate cloud environment, with a tested recovery plan.
Network segmentation so a breach in one area does not spread across the business.
Prompt patching of software and operating systems.

The National Cyber Security Centre (NCSC) provides free guidance for small businesses, and the FCA expects firms to report material cyber incidents. You should also review whether your insurance covers cyber incidents. Our guide explains what cyber insurance covers for women-led SMEs.

3. Secure client data and authentication under the Consumer Duty

The FCA’s Consumer Duty, which applied to all open products from 31 July 2023 and closed products from 31 July 2024, requires firms to act to deliver good outcomes for retail customers. That includes protecting customers from fraud and ensuring their data is handled securely.

Strong client authentication reduces the risk of account takeover and fraudulent transactions. In practice this means:

Requiring MFA for client logins and high-risk actions such as payments or address changes.
Using biometric verification or one-time passcodes sent through secure channels, not plain SMS where possible.
Monitoring for unusual login locations, devices or transaction patterns.
Keeping clear records of consent for data processing under UK GDPR.

The Information Commissioner’s Office (ICO) can fine firms for data breaches, so your privacy notices, retention schedules and breach response plan must be up to date. Treating data protection as part of customer care also helps meet your Consumer Duty obligations.

4. Vet and monitor third-party suppliers

Most financial services firms rely on third parties for payment processing, cloud hosting, IT support or compliance software. Each supplier is a potential entry point for attackers or a source of regulatory risk. The FCA and Prudential Regulation Authority expect firms to manage outsourcing and third-party risk proactively.

Before signing a contract, carry out due diligence that covers:

The supplier’s security certifications, such as ISO 27001 or Cyber Essentials Plus.
Where data is stored and whether it leaves the UK or European Economic Area.
The supplier’s incident response plan and notification obligations.
How the contract ends and how data is returned or destroyed.

Review suppliers at least annually and after any security incident. Keep a register of critical third parties so you can respond quickly if one is compromised.

5. Test, review and update your controls continuously

Threats and regulations change constantly. A policy written in 2024 will not reflect the risks of 2026 unless it is reviewed regularly. The FCA’s operational resilience rules require firms to identify important business services, set impact tolerances and test their ability to recover from disruption.

Build a continuous improvement cycle that includes:

Quarterly vulnerability scans and annual penetration testing by an independent provider.
Regular phishing simulations and staff training, since human error remains a leading cause of breaches.
An incident response plan that is rehearsed at least once a year.
A compliance calendar that tracks FCA, OFSI, ICO and HMRC deadlines.
Board or management reports on risk metrics at least quarterly.

If you are unsure where to start, our startup’s guide to insurance covers the basics of protecting a young financial services firm.

Action steps to protect your financial services business

Protecting a financial services business is an ongoing process, not a one-off project. Start with the areas that carry the highest regulatory and financial risk: sanctions screening, cyber resilience, client authentication, third-party due diligence and continuous monitoring.

Audit your current sanctions and AML controls against OFSI and FCA expectations.
Implement MFA and encryption across all systems that hold client or payment data.
Review your Consumer Duty evidence, including how you protect customers from fraud.
Assess your critical third-party suppliers and update contracts where needed.
Set a quarterly review calendar for security testing, staff training and compliance updates.

By taking these steps, you can protect your financial services business from costly breaches, strengthen client trust and keep your firm on the right side of UK regulators in 2026.

Hannah Ashworth

A UK business writer and editor covering enterprise, funding, and leadership for women founders. She writes practical, data-driven guides on grants, self-employment, and growth strategy - translating complex regulatory and financial information into clear advice for women running or starting businesses. Before joining Prowess, Hannah worked in small-business advisory and content strategy.

Prowess