Enhancing Financial Services Bill Announced In King's Speech 2026

The King has delivered the King's Speech 2026, which sets out the government's legislative agenda for the new Parliamentary session.

Given the various policies and initiatives announced by the government over the past year to help reduce regulatory burdens and drive growth – notably under the Leeds Reforms and related Financial Services Growth and Competitiveness Strategy (see our blog post for more information) – a new financial services bill was anticipated. The government has duly announced the Enhancing Financial Services Bill as one of the legislative measures it intends to introduce to strengthen the UK's economic security. 

As outlined in accompanying background notes to the speech, the Enhancing Financial Services Bill will seek to achieve the following:

• Reforming the Financial Ombudsman Service (FOS). Following a consultation process (see our blog post for a discussion), the government confirmed in March 2026 that it would legislate to make significant reforms to the FOS. The reforms are designed to modernise consumer protections and redress arrangements to make them appropriate to today's markets and the digital age, bringing clarity and consistency for consumers and businesses. 
• Consolidating the Payment Systems Regulator (PSR) within the FCA. As announced in March 2025, and subsequently confirmed in April 2026 after consultation, the PSR will be abolished and its functions transferred to the FCA. The government considers that this streamlining of payments systems regulation will enable stronger coordination and more defined responsibilities, resulting in clearer accountability, faster decision-making and support for innovation.
• Reforming the Senior Managers and Certification Regime (SMCR). The government confirmed in April 2026, following consultation, that it would legislate to reform the SMCR. The goal is to ensure the SMCR imposes a proportionate administrative burden on firms without compromising on core protections under a strong individual accountability framework. The reforms include removing the certification regime from the Financial Services and Markets Act 2000 (FSMA), reducing the number of senior management functions that require regulatory pre-approval, and streamlining the Conduct Rules. 
• Enabling the expansion of credit unions. In March 2026, the government published its response to its call for evidence on credit union common bond reform. It is legislating to enable credit unions toexpand by improving the rules on who can become a member. This will allow credit unions to grow sustainably and serve more people and communities, which will in turn widen access to affordable finance and support the government's aim to double the size of the mutual and co-operative sector. 
• Updating the bank ring-fencing regime. The Chancellor committed in her 2025 Mansion House speech to "meaningful reform" of the statutory framework for the bank ring-fencing regime, to help support growth. She announced a short review of the regime, which was due to report in early 2026. The legislative reforms will improve competition in SME lending and help small businesses to access finance.

In addition, other relevant legislation to be introduced by the government includes the following Bills:

• The Regulating for Growth Bill, which will seek to build on the government's 2025 Regulation Action Plan to modernise regulation to support growth and innovation, while retaining vital safeguards. There is no specific reference to the financial services sector in the description of this Bill, but the stated aims are to strengthen the growth duty that applies to key regulators (the FCA and the PRA each have a secondary competitiveness and growth objective), and to create cross-economy sandboxing powers.
• The Digital Access to Services Bill, which will establish the legal framework for the government to create, issue and use digital ID. The government's consultation seeking views on a national digital ID system closed to responses earlier this month. For the financial services industry, the potential usability and impact of the introduction of digital ID - including in respect of access and inclusion, fraud prevention, customer journeys and firms' operational processes – means the progress of this Bill will be tracked with interest.
• The Cybersecurity and Resilience Bill, which will update existing legislation to strengthen the UK's defences and protect essential UK services from cyber attacks. Among other things, this Bill will expand the remit of existing regulations to better protect more of the core services on which people and businesses rely (managed IT companies, data centres, and operators that manage the flow of electricity to smart appliances will be within scope), and it will include measures to ensure cyber regulators are more effective and consistent. The government also intends to show greater agility and responsiveness in respect of evolving cyber threats, with new powers to make changes to the regime in secondary legislation. This Bill was carried over from the previous Parliamentary session of Parliament and reintroduced (resuming at the report stage, which it had reached).
• The European Partnership Bill, which will provide a framework of powers ensuring the implementation of UK-EU agreements now and in the future. The framework will include powers to fulfil treaty obligations in agreements with the EU where it serves the national interest, and a power to extend the Bill's application to new treaties with the EU in the future. This is in line with recent comments by the Prime Minister and Chancellor about the strategic importance for the UK of closer alignment with the EU, and calls from some trade associations for greater engagement and closer co-operation in the area of financial services to support growth and open up investment opportunities.
• The Competition Reform Bill, which will deliver further reforms to the UK competition regime. The final details of this Bill will be informed by the outcome of the government's recently closed consultation on reforms in this area. However, provisions to be included will relate to improving decision-making at the Competition and Markets Authority (CMA), providing more clarity and flexibility in merger reviews, and making market reviews faster and more focused (meaning they will generally take no longer than 18-24 months, remedies will be regularly reviewed and regulators for specific sectors will, where appropriate, be able to take responsibility for ongoing remedies). 

Next steps

Members of both Houses will now debate the content of the speech over several days, considering the different subject areas in turn. After the House of Lords debates, the Bills will be introduced. The speech will be voted on by the House of Commons after its debates.

Comment

The government's announcement of the Enhancing Financial Services Bill, and what it seeks to deliver, are not a surprise: the planned reforms were well-known, as was the government's intention to legislate when Parliamentary time allowed. What is not yet known, but will emerge over time, is whether the various reforms will achieve their stated aims, including when measured in terms of driving growth and supporting innovation, both of which are clear and much-repeated priorities for both the government and the financial services regulators.