The European Commission’s 2026 Work Programme: Key Highlights for Financial Services

The European Commission recently unveiled its 2026 Work Programme, outlining a forward-thinking legislative agenda aimed at enhancing competitiveness, simplifying regulations, and consolidating strategic initiatives. This article explores the implications of the 2026 Work Programme for financial services, particularly in the context of investment funds, and highlights essential initiatives that fund managers must monitor.

A Shift in Legislative Priorities

Focus on Competitiveness and Modernisation

Published on October 21, 2025, the Work Programme signals a clear pivot in the Commission’s approach to financial services and investment funds. The emphasis remains on fostering digital and sustainable transitions, yet certain legislative reviews, notably the long-awaited review of Commission Directive 2007/16/EC (the Eligible Assets Directive or EAD), have been deprioritized.

Deprioritisation of the EAD Review

Despite early expectations for reform, the Commission has decided to delay the review of the EAD, which regulates the types of assets that UCITS funds can invest in. Following the European Securities and Markets Authority’s (ESMA) technical advice delivered on June 26, 2025, which recommended stricter definitions for eligible assets, the Commission is opting for a more cautious approach. Although a consultation regarding the EAD is anticipated in the latter half of 2026, immediate legislative proposals have not been prioritized.

Why the Wait-and-See Approach?

This decision to deprioritize the EAD review indicates the Commission’s desire to gather more market feedback before proceeding. Stakeholders may find this approach disappointing, yet it reflects a broader strategy aimed at avoiding regulatory fragmentation and ensuring the long-term stability of the financial landscape.

Key Financial Services Initiatives in the 2026 Work Programme

The Work Programme highlights several important initiatives affecting the financial services sector:

1. Taxation Omnibus Proposal

This extensive legislative package focuses on simplifying EU tax regulations, including cross-border fund structures and enhancing withholding tax relief mechanisms. Fund managers should pay close attention to these changes, as they can significantly affect operational efficiencies.

2. European Innovation Act & Quantum Act

These legislative frameworks are designed to support capital markets and venture financing, potentially impacting fund strategies focused on emerging technologies. Fund managers may want to explore innovative investment avenues aligned with these developments.

3. Circular Economy Act

Anticipated to influence sustainability disclosures and investment criteria, this act will have considerable implications for ESG (Environmental, Social, and Governance) funds. Ensuring compliance with new sustainable product standards will be crucial for fund managers.

Emphasis on Simplification and Strategic Consolidation

One of the defining features of the 2026 Work Programme is simplification. This strategy is in line with the Commission’s ongoing agenda to streamline EU regulations and reduce administrative burdens.

Legislative Streamlining Initiatives

The Commission plans to repeal outdated legislation and consolidate existing laws to make EU regulations “lighter, clearer, and easier to implement.” By focusing on high-impact reforms, the EU aims to create a more agile regulatory environment for financial services.

Stress Testing Existing Regulations

The Commission’s commitment to “stress-testing” the EU legislative framework will identify areas for potential rule streamlining without sacrificing investor protection or market integrity. This could lead to enhanced integration in fund regulation, benefiting both investors and fund managers.

Implications for Fund Managers

The 2026 Work Programme presents both clarity and caution for fund managers:

Current Landscape

• The absence of immediate changes to the EAD allows existing UCITS investment strategies to remain intact. However, ongoing vigilance regarding potential regulatory shifts is essential.

New Opportunities

• The focus on digitalisation and competitiveness may offer avenues for innovative fund products, especially those that align with the EU’s strategic priorities in technology and sustainability.

Close Monitoring Required

• Fund managers must keep a close watch on tax and ESG-related initiatives as they develop, ensuring they adapt to any regulatory changes effectively.

Looking Ahead: The Future of Financial Services in the EU

While the decision to push back the EAD review may not resonate positively with all stakeholders, it serves a strategic purpose. By concentrating on high-impact reforms and minimizing legislative clutter, the EU aims to cultivate a more resilient and agile financial ecosystem.

Stay Informed

For those involved in asset management and investment funds, staying up-to-date on the latest developments related to the EAD and the broader implications of the 2026 Work Programme is critical.

For expert advice on UCITS eligibility requirements or further insights into the Commission’s 2026 Work Programme, feel free to reach out to a member of our Asset Management and Investment Funds Group.

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By staying attuned to these developments, stakeholders can better navigate the evolving landscape of financial services in the EU and identify strategic opportunities for growth.