May 11, 2026, 10:34 GMT | Comment
A new UK financial services bill is expected to be unveiled on Wednesday as part of government plans for the coming parliamentary session. It's likely to feature reforms the Labour party has already pledged but that require legislation, including to the financial industry's redress system, accountability regime for senior executives and the payments regulator. What else might be included is much less certain.
The UK financial services industry is bracing this week for fresh reforms to be announced in legislation aimed at fulfilling pledges by the ruling Labour party.
A financial services bill is expected in the government’s agenda for the coming parliamentary session, due to be ceremonially unveiled on Wednesday in a speech by King Charles.
"Having a bill is quite an important signal about taking the sector seriously and using it to drive growth," John Godfrey, managing director of public affairs, policy and research at industry lobby TheCityUK, told MLex.
Fine detail on the legislation won't come this week, but it is widely expected to cover at least three key areas where finance minister Rachel Reeves has proposed reforms aimed at boosting economic growth.
"I think the urgent things that people really want are exactly this: reforms to the
Financial Ombudsman Service, the Senior Managers & Certification Regime, and the payments regulator. That has to happen,” Godfrey said.
— Headline reforms —
Reforms of the Senior Managers & Certification Regime, or SM&CR, have been promised by the government after the industry long criticized the rules as burdensome, costly and a drag on competitiveness.
Introduced after the 2008 financial crisis to strengthen accountability and conduct standards among senior executives in financial services, the regime has come under pressure from firms seeking a lighter regulatory framework.
While regulators have already begun a limited streamlining of the rules, the new legislation is expected to hand the
Financial Conduct Authority and the
Bank of England’s
Prudential Regulation Authority broader powers to overhaul the regime further.
Reeves had signaled such changes soon after taking office in 2024, when she told industry leaders she wanted to scrap the Certification Regime “so that businesses are freed up to focus on growth.”
While some have said that the regime will eventually be watered down in the name of growth, Caroline Dawson, a partner at law firm
Clifford Chance, told MLex that the core focus on senior managers remains in place.
"There's been a lot of press coverage about watering down the senior managers regime. But the changes that are being proposed are more in line with the current drive for simplification. The focus is really on reduction of burden, and the Certification Regime is a clear area where the burden on firms can be reduced without weakening the overall regime,” Dawson said.
The bill is also expected to advance the government’s pledge to stop the Financial Ombudsman Service, or FOS, from acting as a quasi-regulator. It already outlined what reforms will look like earlier this year (see
here).
It said it would amend the so-called “fair and reasonable” test to better align the ombudsman service's decisions with FCA’s rules, and introduce a referral mechanism between the FOS and the FCA and 10-year time limit for bringing complaints to the ombudsman.
A third area expected to be covered by the bill is the dismantling of the Payment Systems Regulator. The government announced plans early last year to bring oversight of payments directly inside the FCA as part of a broader effort to reduce the number of regulators and cut red tape (see
here).
"In line with the current simplification agenda, you can split the regulation of payment systems between the FCA and the [central] bank, it makes sense not to have yet another regulator covering them," Dawson said.
— Other measures —
Beyond those headline reforms, industry executives say there are no other obvious measures that urgently require legislation.
One area where the government has yet to give clarity is ring fencing. The government has pledged a review in early 2026, raising expectations that it could eventually ease rules that most large lenders — with the exception of Barclays — have long criticized as costly and restrictive.
The rules were introduced as a response to the 2008 global financial crisis in order to separate retail banking services from riskier investment activities within large banking groups.
Any eventual reforms to ring fencing would likely need to be coordinated between the finance ministry, the Bank of England and the Prudential Regulation Authority.
But recent comments from incoming PRA chief and former Barclays executive Katharine Braddick suggest there may be limited appetite for reopening the issue in the near term. “It seems to me that that matter is settled for now,” Braddick told parliament last month.
Her remark may signal that regulators are not currently pushing for further changes to the regime, though it remains unclear how closely she has been involved in any ongoing discussions around possible reforms.
"I'm not sure that scrapping it altogether is going to be either politically attractive or something that we end up seeing. I suspect that we won’t see anything in there on ring fencing … But even if we did see something, I think it would be strategic tweaks rather than any major changes," Dawson said.
There’s also scope for further work from the ministry to push for a digital ID in the financial services sector to simplify transactions, or to review overlapping regulations that slow down investment into defense funding.
The ministry has also launched a Wholesale Digital Markets task force, which might bring forward ideas for new reforms that could be added to the bill later on during the lawmakers' review.
There’s also an opportunity for the government to speed up authorizations of early-stage financial services companies, accounting firm RSM said. “Currently, it acts as a barrier for firms wanting to move quickly. While there’s an onus on firms to produce high quality applications, there’s significant scope to improve processing times,” said Hugh Fairclough, a partner at the firm.
— Scrutiny —
A new bill would be scrutinized by both Houses of Parliament, with the reforms broadly expected to attract cross-party support — though there is no guarantee of smooth progress.
The Labour government holds a strong parliamentary majority and some of its lawmakers
could push for tougher consumer protection safeguards and seek amendments as the legislation moves through parliament.
The finance ministry has declined to comment.
Please e-mail editors@mlex.com to contact the editorial staff regarding this story, or to submit the names of lawyers and advisers.
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