Parliament introduces wide-ranging Bill to reform UK financial services regulation

The Government has presented a Financial Services and Markets Bill before Parliament. The Bill, which was included in the 2026 King’s Speech under the different name of the Enhancing Financial Services Bill, delivers parts of the Leeds Reforms announced by the Chancellor in 2025. Once enacted, the Bill will impact various aspects of financial services firms’ compliance frameworks including those relating to individual accountability, consumer credit and ring-fencing.

Key changes in the Bill include:

• SMCR reform: The Government, Financial Conduct Authority and Prudential Regulation Authority have consulted on reducing the burden of complying with the Senior Managers and Certification Regime. The Bill removes some firm-facing obligations from the SMCR's legislative framework, including removing the Certification Regime, requirements relating to the Conduct Rules and rules relating to senior managers’ statements of responsibilities. The FCA and PRA will then have more flexibility to replace these requirements in their rulebooks.

• Consumer credit reform: Currently consumer credit requirements are split between the Consumer Credit Act 1974 (CCA), secondary legislation and rules set by the FCA. Building on a previous phase of legislative reform, the Bill repeals many of the remaining CCA provisions including information disclosure requirements and associated sanctions. The repeal will only commence once replacement FCA rules are in place.

• FOS reform: The Financial Ombudsman Service investigates consumer complaints against financial services as a way of resolving disputes outside the court system. Following a review of the UK's redress regime, the Bill changes the framework that the FOS operates in, including by adapting the “fair and reasonable” test so that it is met where the firm has complied with relevant FCA rules and providing the FCA with tools to respond to mass redress events.

• Abolition of the PSR: The Government announced last year that it would abolish the Payment Systems Regulator and transfer its functions to the FCA. The Bill effects this consolidation and provides the FCA with new objectives and powers to oversee payment systems.

• Ring-fencing reform: The UK ring-fencing regime structurally separates core retail banking activities from wholesale and investment banking. The Bill makes targeted amendments to the statutory framework for the regime. Among the changes is a new mechanism allowing elements of the existing statutory framework to be updated through PRA rules.

• Overseas recognition: Currently HM Treasury’s ability to recognise an overseas jurisdiction as having equivalent rules to UK financial regulation is limited to powers that derive from EU legislation. The Bill creates a new framework for HM Treasury to unilaterally recognise overseas regimes as being comparable for any financial services activity. As part of the UK's Financial Services Growth and Competitiveness Strategy, work is already underway to replace equivalence regimes under UK law with overseas recognition regimes.

• Appointed representatives: Regulated firms may appoint representatives to carry on their financial services. The Bill introduces a new regulatory gateway requiring principal firms to have permission from the FCA before using appointed representatives. The Bill also amends other parts of the AR regime, including extending the compulsory jurisdiction of the FOS so that it applies to appointed representatives and bringing them within the scope of the SMCR.

• Regulatory deadlines: The FCA and PRA are subject to statutory deadlines for determining various applications. The Bill updates several of these deadlines. This includes new firm applications, variations of permission and financial promotion approvals (from six months down to four months for complete applications, and from 12 months to ten months for incomplete ones) and senior manager applications (from three months to two months).

• In-person banking: On 14 May 2026 the Government launched an independent review into access to banking services. The Bill gives HM Treasury the power to introduce legislation or empower the FCA to make rules intended to ensure reasonable access to in-person banking services. The Government expects to narrow the power once the review concludes in October 2026.

• Cryptoassets: Recent changes to economic crime legislation sought to enable UK law enforcement agencies to recover criminal cryptoassets. The Government has since identified certain limitations with the powers, including in relation to crypto wallet freezing orders. The Bill gives powers to HM Treasury to amend relevant provisions in, for example, the Proceeds of Crime Act 2002 (POCA).

• Other changes: Other changes in the Bill include giving the FCA more AML supervisory responsibilities, changes to improve the operational effectiveness of the FCA and PRA, and the introduction of a provisional licences regime to support start-ups.

Next steps

The Bill has been introduced into the House of Lords. The date for the second reading, which is the first opportunity to debate the main principles of the Bill, is still to be announced. Once the Bill passes the Lords, it will progress to the House of Commons before receiving Royal Asset. This process, if parliamentary time allows, should be completed before the end of the year. Most of the legislation will then only come into force on a date specified via HM Treasury regulations.

Several aspects of the Bill confer powers to HM Treasury and the regulators, for example to enable the creation of overseas recognition regimes or amend cryptoasset-related provisions in POCA. Parliament is likely to scrutinise the extent of these powers, especially where they allow secondary legislation to amend primary legislation (sometimes known as Henry VIII powers).

The Bill is a washing line of discrete measures impacting several areas of financial regulation. Most of its contents have been well-trailed via consultations over the last couple of years. Even so, as it works its way through the parliamentary process, there are likely to be proposals for further reforms to be added to the line.