A major overhaul of the UK’s financial regulatory framework has moved closer to becoming law after the Financial Services and Markets Bill [HL] cleared the House of Lords. The legislation, which proposes the abolition of a key regulator and significant updates to consumer credit laws, was formally introduced to the House of Commons on 15 September 2026.
Listed as Bill 152 for its journey through the Commons, the 2026-27 Bill reached this milestone after completing its Third Reading in the Lords earlier the same day. The reforms are intended to streamline the regulation of financial services and modernise rules that have remained largely unchanged for decades.
One of the most significant structural changes included in the Bill is the proposed abolition of the Payment Systems Regulator (PSR). Under the new plans, the functions and responsibilities of the PSR would be transferred to the Financial Conduct Authority (FCA). This move is designed to centralise oversight of the financial sector, reducing the number of separate bodies that firms must interact with.
Modernising Consumer Protections
For the general public, the Bill signals a long-awaited update to the Consumer Credit Act 1974. The government aims to modernise this legislation to better reflect how people use credit in the 21st century, particularly regarding the transparency of credit agreements and personal loans.
Alongside these changes, the Bill seeks to reform the Financial Ombudsman Service (FOS). These reforms are intended to enable the service to resolve disputes between consumers and financial firms more quickly. While the specific timeline for these changes depends on the Bill passing through the Commons, the focus is on reducing wait times for people seeking redress for financial errors or service failures.
Innovation in Payment Systems
The legislation also introduces a new secondary objective for the Bank of England. The central bank will be required to facilitate and support innovation in payment systems and digital settlement assets. This is intended to ensure the UK remains competitive as digital currencies and new payment technologies evolve.
While the Bill has now passed the scrutiny of the House of Lords, it must undergo several stages of debate and potential amendment in the House of Commons before it can receive Royal Assent and become an Act of Parliament. No immediate action is required from consumers or business owners at this stage. Detailed information on the current progress of the legislation can be found in the official Bill documents.
