King’s Speech 2026 and the Financial Services and Markets Bill: implications for financial services

[This article was updated on 21 May to reflect the publication of the Financial Services and Markets Bill].

The King’s Speech set out the programme of legislation that the UK Government intends to pursue in the forthcoming parliamentary session. The package of bills announced includes a Financial Services and Markets Bill (FS Bill), published on 19 May, and several other measures relevant to financial services (FS) firms.

At a glance:

• For FS firms, the King’s Speech and FS Bill confirm the Government’s intent to legislate to deliver reforms already trailed. There are no surprises. For firms, there is now clarity around where there is likely to be legislative progress and what needs to be captured as part of horizon scanning, but there is very little that demands immediate action.
• The FS Bill will implement several discrete reforms. These include planned changes to the Senior Managers & Certification Regime (SMCR) alongside structural and operational changes affecting the Financial Ombudsman Service (FOS) and the Payment Systems Regulator (PSR). But implementation of those changes will still take time. Firms are unlikely to feel any impact until 2028 at the earliest but will need to respond to consultations in the run-up to that period.
• The FS Bill will give regulators more flexibility to amend the bank ring-fencing regime. More broadly, it signals a shift towards empowering regulators and increasing flexibility by moving detailed rules out of legislation and into regulatory frameworks (e.g. SMCR, ring-fencing, consumer credit). This would allow regulators to move quickly and amend detailed rules as required.
• The text of the FS Bill provides further detail on the overall scope of topics being addressed by the Government. While all the topics had been signalled previously, some, such as the Consumer Credit Act 1974 (CCA), overseas recognition regimes and insurance risk transformation, were not mentioned explicitly in the King’s Speech.
• The King’s Speech also signalled wider cross-cutting issues for FS firms to track, including AI, digital identity, and cyber resilience.
• Although not mentioned in the FS Bill, there remains a busy pipeline of FS regulatory change already underway. Government reforms including for Open Banking, digital assets, targeted support and alternative investment fund managers will continue to progress through its existing law-making powers.
• Taken together, the Speech, the FS Bill and the updated regulatory initiatives grid (published on 19 May) provide greater visibility on the forward-looking pipeline and timing of UK regulatory reforms. There is no material change to the regulatory pipeline proposed in December 2025.
• The FS Bill now proceeds through Parliament, where amendments are possible. While much of the Bill is unlikely to be controversial, FOS reforms are a notable possible exception – and could delay progress of the Bill as a whole. Looking further ahead, the next key marker is the Chancellor’s Mansion House speech in July, one year on from the Leeds Reforms package and the FS Growth and Competitiveness Strategy.

This note sets out our view on the key signals for FS policy and regulation resulting from the King’s Speech and FS Bill, and what to watch out for in the coming months.

What did the King’s Speech signal for FS policy and regulation?

As widely expected, the Speech confirmed the Government’s intention to table an FS Bill, advancing its growth and competitiveness agenda by taking forward a range of measures announced over the last two years. Key initiatives include [non-exhaustive]:

• Reforming SMCR: While reiterating that SMCR is a core pillar of UK regulation, policymakers are reviewing its practical application. The Government is seeking to reduce the regime’s regulatory burden by 50%, split across two phases. Initial SMCR reforms focused on improving approval processes. The FS Bill enables a more substantive second phase. This includes removing the Certification Regime from primary legislation, allowing the regulators to develop a more flexible framework, and exploring ways to reduce the number of Senior Management Function roles that require regulatory pre-approval. The latest regulatory initiatives grid indicates that the FCA/PRA will consult on Phase 2 changes in the second half of 2026. Considering the work required, implementation of Phase 2 will likely run into 2028.
• Reforming the FOS: Aimed at reducing future market disruption and promoting regulatory predictability. Tensions and grey areas between the roles of the FCA and FOS in consumer redress mechanisms – highlighted by the motor finance cases – are a key driver. The Bill would progress the more fundamental FOS reforms announced last summer and confirmed in March, including giving the FCA final decision-making responsibility for mass redress events and introducing a referral mechanism to the FCA in instances of rule application ambiguity. However, implementation timelines remain uncertain. The FS Bill reconfirms that, even once it becomes law, secondary legislation will be required in certain areas, including to specify criteria for the referral mechanism.
• Abolishing the PSR: Announced in March 2025, the PSR will be abolished and its functions transferred to the FCA, in a move designed to reduce regulatory complexity and foster growth. This consolidation aims to cut regulatory overlaps, streamline supervision, promote clearer accountability and support faster decision-making. However, the actual benefits will hinge on how, in practice, the FCA will exercise its new powers and responsibilities. Key factors include its approach to balancing competition and innovation with consumer protection and market integrity, the supervisory intensity applied to firms, and how it will take forward live workstreams on issues such as card fees, authorised push payment fraud, and Open Banking. This, together with FOS reforms, will only affect firms once the operational changes have been implemented.
• Bank ring-fencing review: Although the King's Speech gave few details, a review published by the Government on 18 May outlined the Government’s intention to move to a more flexible and proportionate regime. The FS Bill moves ring-fencing requirements from legislation into the PRA rulebook in order to give regulators flexibility to directly amend the requirements. Proposals under consideration include a New Growth Allowance, enabling ring-fenced banks to undertake otherwise restricted activities up to 10% of Pillar 1 RWAs for credit risk, and greater scope to share operational resources across the ring-fence (e.g., IT and back office functions). The Government and PRA will consult on detailed changes over the summer. Most elements of the proposed changes will also require secondary legislation, so we expect implementation to take at least two years.
• Cross-cutting changes to how the FCA and PRA operate: The FS Bill will implement a package of already announced operational reforms. This includes new, shorter statutory deadlines for certain FCA/PRA approvals, including new firm and SMCR approvals, which should speed up regulatory decisions for firms. The Government also plans to scale back the role of the statutory “have regards” principles, so they guide FCA/PRA long-term strategy-setting but carry less weight in their day-to-day decision-making. It is too soon to judge the practical impact, but this could lead to more nimble supervisory decision-making and policymaking.

What else does the FS Bill cover?

Beyond what was highlighted in the King’s Speech, the Bill contains further important reforms – well-trailed over the last two years.

• CCA reforms: Intended to modernise the consumer credit system, making it more flexible and reducing the burden on firms. The Government initially planned a two-stage process, with more substantive changes – particularly concerning consumer rights and protections – slated for phase 2. The Government has now confirmed that it will proceed without a Phase 2 consultation. Instead, the FS Bill will repeal much of the CCA, allowing the FCA to recast the regime into its rulebook.
• Appointed representatives (ARs): Advancing targeted reforms aimed at reducing AR misconduct, including requiring authorised firms to obtain FCA permission to act as a principal before taking on any ARs, extending FOS jurisdiction to ARs where principals are not liable, and bringing ARs within the scope of the SMCR. Overall, the activities of ARs will face more scrutiny, and principals will need to ensure they have appropriate expertise and resources to oversee their ARs effectively.
• Insurance risk transformation: The Government is focused on facilitating the transformation and transfer of risks from wholesale general insurers to capital markets. To achieve this, the Bill empowers the PRA to review and adjust funding requirements for Special Purpose Vehicles used in these risk transfers and authorises the Government to permit Protected Cell Companies to directly underwrite insurance contracts. While these changes are unlikely to fundamentally reshape the wholesale insurance market, they aim to increase the attractiveness of a risk transformation framework that has had limited success to date – especially compared with other jurisdictions.
• Overseas recognition regimes: The Bill expands the Government’s powers to recognise overseas regulatory regimes as equivalent across any FS activity. The Government’s current powers are limited to certain areas of assimilated or restated EU law. This change could be particularly important for firms operating in emerging areas such as digital assets, stablecoins and ESG ratings, where the Government has no such powers currently.
• Supporting start-ups and scale-ups: The Bill enables the FCA to grant time-limited “provisional licenses” (up to two years), allowing firms to conduct limited regulated business under close supervision while progressing towards full authorisation. The regime excludes activities coming into the FCA’s perimeter for the first time (e.g. crypto), variations of permission, and firms that will be subject to dual FCA/PRA regulation. It complements the FCA’s existing tools, e.g., sandboxes and pre-application support, to help firms launch and scale more quickly.

Beyond the FS Bill, what other Bills should FS firms be watching?

Wider cross-cutting initiatives could still shape the FS operating environment – particularly on AI, data and identity.

• Regulating for Growth Bill: This Bill builds on the 2025 Regulation Action Plan to modernise regulation to support growth and innovation. It will introduce two main measures. First, it will create cross-economy legal “sandboxing powers”, allowing rules to be temporarily relaxed under strict oversight so firms can test new products and technologies – such as AI. Where trials prove successful, the Bill will permit temporary rule changes to be promptly incorporated into permanent legislation. A key question is whether, and how, this will interact with the FCA’s existing sandbox and its rulemaking remit. Second, the Bill will establish a statutory Growth Duty for leading regulators, supported by a new ministerial power to set strategic direction. The PRA and FCA already have growth and competitiveness objectives. However, following the House of Lords Financial Services Regulation Committee’s “Growing pains: clarity and culture change required” report, we will need to see how the Government now exercises its further influence over how the regulators practically deliver on these objectives.
• Cyber Security and Resilience Bill: Originally introduced during the previous parliamentary session, it expands the remit of the existing cybersecurity regime to encompass – among others – data centres and managed service providers. Given the maturity of the operational resilience and cyber regimes already applied to FS firms, the sector is unlikely to be directly in scope. However, FS firms may benefit indirectly where key suppliers are subject to stricter cyber resilience requirements, such as the duty to promptly notify affected customers in case of significant cyber incidents. It also remains to be seen whether recent shifts in the cyber threat landscape will lead the Government to revisit the substance of the Bill.
• European Partnership Bill: This Bill is aimed at improving the UK-EU trade relationship, including giving the Government powers to align UK standards with EU rules over time, where new sector-specific agreements are reached. There is no specific mention of FS. However, the Bill will include powers for the Government to extend the Bill to apply to new EU treaties.
• Digital Access to Services Bill: To establish a voluntary digital identity scheme, enabling citizens to prove their identity when accessing public services.

What else is on the Government’s FS policy to-do list?

Although not mentioned in the King’s Speech, there also remains a busy pipeline of FS regulatory change underway. Crucially, not everything depends on the FS Bill becoming law. The Government can advance a range of already announced or in-flight initiatives using existing powers (including to table secondary legislation). Key areas include [non-exhaustive]:

• Open Banking: Later this year, the Government is expected to grant the FCA new powers to set Open Banking rules, enabling the FCA to create a long-term regulatory framework.
• Payments and digital assets: By the end of June, the Government will start work to modernise UK payments regulation, including to clarify rules for stablecoin-based payments. This is a multi year initiative, running into 2027/28.
• Asset management: Reforms to the alternative investment fund managers regime are still pending. The FCA indicated that these will aim to reduce “obligations on smaller funds, while requiring what is needed from larger ones – proportionate to their size and impact.”
• Targeted support: The Government has some unfinished business to remove some lingering regulatory uncertainties and fully enable new offerings. In particular, updating the Privacy and Electronic Communications Regulations to enable workplace pension providers to proactively offer targeted support to customers who have not opted out from receiving marketing communications.

What happens next?

The Speech and the FS Bill are important publications, but the impact on firms can only be fully assessed when further details emerge.

A key test now is pace and delivery of the legislation through the Parliamentary process. Of the measures announced, reforms affecting the FOS are the most likely to tigger controversy because of the perception by some stakeholders that the reforms reduce consumer protections. Any delay in progressing FOS reforms could slow progress on the FS Bill as a whole.

The next key FS policy milestone will be the Chancellor’s Mansion House speech, anticipated to take place in July. One year after the FS Growth and Competitiveness Strategy was unveiled, a key question will be whether the Government will bring forward further pro-growth and competitiveness reforms.