The UK is set to introduce new rules for the modernisation of the Financial Services and Markets Bill (FSMB), but what is being proposed and how will this shape the country’s financial market moving forward?
Amendments to the UK Financial Services and Markets Bill (FSMB) will be discussed amongst members of the House of Lords today (8 June) in a bid to streamline regulations across the country.
The discussions aim to reform several areas of financial regulation, including the Financial Ombudsman Service, abolishing the Payment Systems Regulator (PSR), introducing a ‘provisional licences’ authorisation scheme, and making reforms to the UK’s bank ring-fencing regime.
Some of the members speaking at the House of Lords include Chair of the Financial Services Regulation Committee, Baroness Noakes, former Vice President of Citibank, Baroness Kramer, and former Non-executive Director of Co-op Bank, Lord Altrincham.
Of the planned reforms, the PSR will be consolidated into the Financial Conduct Authority (FCA), which was announced in March 2025.
At the core of the amendments is to modernise consumer protection and streamlining financial regulations to support businesses and financial institutions to also attract international investment by reducing fragmentation.
The FSMB amendments also intends to update the UK’s financial crime framework with changes to anti-money laundering and counter-terrorist financing rules
The FCA and Prudential Regulation Authority (PRA) will oversee the enforcement of any amendments to the FSMB.
The second reading at the House of Lords will follow a period of revision and any other amendments to be tabled before it can reach Parliament at the House of Commons before a final vote.
What is being proposed?
The Financial Ombudsman Service (FOS) is set for a reform under the planned amendments.
The FOS is set for a new modernised look that seeks to redress its system by applying a “fair and reasonable” test for complaints. There is a 10-year limit being proposed for complaints for the FOS to handle.
The Consumer Credit Act is also likely for an overhaul to fit within the digital era. A key component to this would be the new regulations set to be introduced for the growing buy-now-pay-later (BNPL) sector in July 2026.
Other revisions to the Consumer Credit Act involve the repeal of automatic sanctions, the digitisation of legislations to reduce manual bookkeeping, while essential consumer protections will remain intact alongside criminal offences.
Authorised FCA firms could also have to undergo a new process to receive permission to be listed as an authorised representative in the UK.
The new process would revise the current one which outlines that authorised companies can appoint an authorised representative without pre-approval from the FCA.
An expansion of the Senior Managers and Certification Regime (SM&CR) is also being considered to change how authorised representatives and companies assign management and who holds who accountable for complying, and non-compliance, of standards.
