The reforms in this section affect both the rules governing payment firms and the infrastructure through which payments settle. Key developments include the replacement of the Payment Services and Electronic Money Regulations, changes to safeguarding assurance, extended RTGS and CHAPS operating hours, the transfer of PSR functions to the FCA, and longer-term work on Open Finance and the digital pound. Some changes require near-term operational planning, while others remain subject to consultation or policy development.
Developments covered
🟧 Important, uncertain timing/impact
Modernising Payment Services Regulation consultation
HM Treasury and the FCA are reforming the UK’s payment services and e-money framework, replacing detailed legislation with high-level legislation supported by FCA rules.
HM Treasury's consultation sets out how the Government intends to replace the Payment Services Regulations 2017 and Electronic Money Regulations 2011 with high-level legislation supported by FCA rules. The perimeter, key definitions and core rights such as account-termination notice would stay in statute. Detailed requirements would move to the FCA Handbook.
The Government has already committed to commencing revocation of the SCA regulations so the FCA can set outcomes-based authentication rules. UK-issued qualifying stablecoins would be treated as "money-like" and brought into the payments perimeter. Overseas-issued stablecoins would qualify only where HMT recognises the issuer's home regime. A single, restructured set of payment activities would cover both fiat and tokenised payments, but existing firms would need a variation of permission to offer tokenised services.
The consultation also asks how authentication, consent and liability rules should change for agentic payments, and whether senior managers at PIs and EMIs should face enhanced accountability.
For Open Banking, existing access rights would stay in statute and a new right of access for variable recurring payments would be created. The FCA would gain powers under the Data (Use and Access) Act 2025 over ASPSPs, TPPs, the Future Entity and commercial schemes, including scheme pricing. The item is also relevant to the crypto and AI themes.
Key dates
- 6 October 2026: Consultation closed
- Q4 2026: HMT consultation response (expected)
- End-2026: Government to lay a Data (Use and Access) Act statutory instrument for the Open Banking long-term regulatory framework (expected; stated Government commitment)
- Date TBC: HMT to set out its approach to interim safeguarding for stablecoin payment firms when it updates on the draft cryptoasset legislation (expected)
- 2027–2028: FCA consultations and policy statements; HMT to lay the payments statutory instrument (provisional)
Potential impact
- No new obligations arise yet. The PSRs and EMRs, including the SCA provisions, continue to apply in full until revocation is commenced and replacement FCA rules are made
- There is business-model risk for Open Banking participants:
- The FCA may allow ASPSPs to charge for access that is currently free.
- The ban on ASPSPs requiring a contract may be lifted.
- ASPSPs could face new interface, information-sharing and Future Entity funding obligations.
Next steps
- Track the HMT response (Q4 2026)
- Map current PSRs and EMRs obligations into "likely retained in statute" and "likely delegated to the FCA" to anticipate the scope of the 2027–28 FCA consultations
🟧 Important, uncertain timing/impact
FCA Open Finance Roadmap: A vision for a smart data future
The FCA has published a roadmap for extending consent-based data sharing beyond open banking to a wider range of financial products by 2030.
The roadmap sets out the FCA’s long-term vision for open finance, covering products such as SME lending, mortgages, insurance, pensions and investments. It is a strategic roadmap rather than a formal consultation and creates no new regulatory obligations. Initial work will focus on SME lending and mortgages, alongside industry engagement to shape the first open finance framework.
Key dates
- Q4 2026: Discussion paper on the first open finance scheme
- 2027: FCA and HM Treasury to develop the long-term regulatory framework
- 2028-2030: Implementation and scaling of open finance
Why it matters
The roadmap does not introduce new obligations, but future proposals are likely to shape data-sharing requirements, liability between participants and consumer protection. Progress also depends on the wider open banking regulatory reforms.
Next steps
- Engage with the FCA’s industry engagement activities where relevant.
- Respond to the discussion paper once published.
- Assess how future open finance requirements could affect your products, particularly in SME lending and mortgages.
- Monitor the development of the long-term regulatory framework alongside open banking reforms.
🟧 Important, uncertain timing/impact
ISO 20022: Implementing the global payments messaging standard within CHAPS and RTGS
The Bank of England’s phased implementation of ISO 20022 requirements continues. Further purpose code and Legal Entity Identifier (LEI) requirements are planned for November 2027, while the timing of deferred changes, including the removal of unstructured address fields, remains subject to confirmation.
CHAPS and RTGS moved to ISO 20022 on 19 June 2023. Since then the Bank has been phasing in mandatory enhanced data: purpose codes, Legal Entity Identifier (LEIs), structured addresses and structured remittance. From November 2027, purpose codes will be required on all CHAPS payments, and LEIs on pacs.004 returns and pacs.009 COV payments between financial institutions.
On 27 August 2026, Swift delayed its November 2026 standards release over concerns about global readiness. The Bank of England followed by deferring its entire November 2026 RTGS standards release. It currently expects to fold those changes into the November 2027 release, but says this is still subject to confirmation. The Bank is not mandating structured remittance data from November 2026 and has not set a revised date.
The impact goes beyond CHAPS direct participants. Indirect participants, PSPs and corporates that originate CHAPS payments will need to supply this data.
Key dates
- December 2026 (expected): Updated list of changes for the November 2027 RTGS standards release published
- End January 2027: Draft updated schemas and technical guidance published (expected, per the annual change-management cycle)
- 1 April 2027: Deadline for change requests to be considered for the November 2028 release
- April 2027 (expected): Final list of changes, schemas and technical guidance for the November 2027 release
- November 2027: Purpose codes mandatory for all CHAPS payments; LEIs mandatory for pacs.004 and pacs.009 COV payments between financial institutions
- November 2027 (provisional): Deferred November 2026 changes, including removal of unstructured address fields, incorporated into the RTGS standards release (provisional, subject to Bank, Swift and industry confirmation)
- No date: Structured remittance data mandate
Potential impact
- Enhanced data requirements are mandated through the CHAPS rulebook. Payments with missing or incorrect mandated data are exposed to technical rejection, and direct participants must self-declare non-compliance through the Compliance Certificate
- Direct participants are likely to pass data obligations down to indirect participants and originating PSPs through their sponsor or agency agreements. Firms that can't capture purpose codes, LEIs or structured addresses from their customers risk rejected or delayed payments
- The deferral creates timing uncertainty. The November 2027 scope isn't final until April 2027, and the removal of unstructured addresses depends on coordination with Swift and other market infrastructures
Next steps
- Don't pause address remediation because of the deferral. Hybrid and structured formats are already available, and the Bank has urged firms to keep to their original implementation timelines and use the delay to close readiness gaps
- Confirm that customer onboarding, payment initiation channels and APIs can capture purpose codes (using the UK Recommended Purpose Code list), LEIs, and structured addresses before November 2027
- Track the December 2026 change list and April 2027 final schemas. Submit change requests by 1 April if you need schema changes for the November 2028 release
🟧 Important, uncertain timing/impact
The Accelerated Settlement Taskforce T+1 settlement
The UK will move from a T+2 to a T+1 settlement cycle for securities transactions on 11 October 2027, reducing settlement times and aligning with other major markets.
The Accelerated Settlement Taskforce, chaired by Andrew Douglas, has developed the UK’s implementation plan for T+1 settlement, with the FCA and Bank of England supporting the programme. The move will align the UK with North American markets and the planned implementation timetable in the EU and Switzerland, reducing cross-border settlement risk and improving market efficiency.
Key dates
- 11 October 2027: T+1 settlement goes live
Potential impact
Firms that are not operationally ready may face higher settlement fail rates, contractual disputes and increased regulatory scrutiny where inadequate systems and controls contribute to settlement failures. Cross-border firms should also consider the implications of operating across multiple T+1 jurisdictions.
Next steps
- Review systems, processes and counterparty arrangements to support T+1 settlement.
- Begin testing, operational planning and staff training well ahead of implementation.
- Coordinate with custodians, brokers, technology providers and other market participants to ensure readiness.
- Review cross-border operating models ahead of simultaneous implementation in the UK, EU and Switzerland.
🟧 Important, uncertain timing/impact
RTGS and CHAPS settlement hours–early morning extension (EME)
The Bank of England plans to extend CHAPS settlement hours, moving the opening time from 06:00 to 01:30. Implementation is targeted for September 2027, subject to final confirmation.
The Early Morning Extension (EME) moves the start of CHAPS settlement from 06:00 to 01:30. Participation in the new sending window will be optional for CHAPS Direct Participants: all participants will receive payments from 01:30, while only those opting in will be able to send payments during the extended window.
The extension is intended to improve liquidity management, operational resilience and cross-border settlement, and represents the first phase of the Bank’s longer-term roadmap towards near 24x7 settlement.
Key dates
- September 2027: Targeted go-live for the Early Morning Extension (subject to final confirmation)
Operational impact
Direct Participants choosing to send payments during the EME will need to ensure their operational resilience, staffing, systems and incident management arrangements support the extended operating window. Regulatory incident-reporting obligations will continue to apply throughout the new settlement hours.
Next steps
- Decide whether to participate in the EME sending window and assess the business case.
- Review the operational, technology and staffing changes needed to support settlement from 01:30.
- Assess the impact of receiving CHAPS payments from 01:30, even if not opting in to send.
- Monitor the Bank of England’s decisions on further extensions to RTGS and CHAPS settlement hours.
🟧 Important, uncertain timing/impact
Financial Services and Markets Bill: Consolidating the PSR into the FCA
The Financial Services and Markets Bill proposes to abolish the Payment Systems Regulator (PSR) and transfer its functions to the Financial Conduct Authority (FCA).
HM Treasury's 21 April 2026 consultation response confirmed it will abolish the PSR and transfer its functions entirely to the FCA. The Financial Services and Markets Bill [HL] gives effect to this. It was introduced in the Lords on 19 May 2026 and received its Lords third reading and Commons first reading on 15 September 2026.
HMT has set out several intentions for the new framework:
- The FCA will keep the substance of the PSR's objectives, remaining responsible for promoting competition, innovation and service-users' interests in payment systems
- The FCA will have powers broadly equivalent to the PSR's, including the ability to impose price controls or regulate fees where needed to address competition issues
- A designation regime will be retained
- The access regime in the PSRs 2017 will be removed, leaving a single access regime, and specific directions will become appealable to the High Court rather than the CAT
- Transitional provisions will carry existing PSR requirements across, including those for mandatory APP reimbursement, and the FCA will then decide its own approach
- PSR functions under the PSRs 2017, IFR and PAR also transfer, but those within the assimilated-law review will then be reviewed and reformed
The Bill also reforms the Financial Ombudsman Service, introduces provisional licences and changes the ring-fencing regime. See the redress entry.
Key dates
- 15 September 2026: Lords third reading; Commons first reading (confirmed)
- TBC: Commons second reading (awaiting scheduling)
- TBC: Royal Assent and commencement of the transfer (provisional)
Potential impact
- PSR directions, requirements and reporting obligations stay binding until commencement. Transitional provisions then move them to the FCA, which may review and replace them over time, so the change comes in the medium term rather than on day one.
- Appeal routes narrow. Specific directions move from the CAT to the High Court, which changes how firms can challenge decisions.
Next steps
- Keep complying with all PSR directions, requirements and reporting obligations until commencement.
- Review the payments provisions in the Bill as brought from the Lords (Bill 152), focusing on powers, access, appeals and transitional arrangements.
🟩 Long-term/indicative
Bank of England digital pound development
The Bank of England and HM Treasury continue to assess the case for a digital pound, with the design phase running through 2026 and no decision yet taken on whether it will be introduced.
The Bank of England and HM Treasury remain in the design phase for a potential retail CBDC, and no decision has been taken on whether to introduce one. Their March 2026 progress update said the two authorities would set out their decision on next steps later this year. That decision will draw on the blueprint (a proposed design for a digital pound and its ecosystem) and a joint assessment. The update frames the choice as either proceeding with a digital pound or putting more emphasis on other initiatives to modernise UK payments. It also says design insights, including on interoperability, will be used by RPIB whatever the outcome.
Phase 2 of the Digital Pound Lab ran from roughly November 2025 to July 2026. The Lab is a simulated environment with no real customers or money, and 12 participants built their own use cases in it. The Bank's September update shows its own demos, covering one-time aliases, Confirmation of Payee, ESIP wallet connections, allowance-based e-commerce payments and streaming micropayments using programmable locks. It also shows participant demos on offline payments (Crunchfish) and conditional B2B payments (TECHT Labs). A final Phase 2 update will follow. Any digital pound would require primary legislation, and the Bank has committed to further public consultation before any launch.
Key dates
- Date TBC: Final Digital Pound Lab Phase 2 update published (expected)
- Date TBC: Any decision to introduce a digital pound remains subject to further assessment, consultation and legislation.
Potential impact
The digital pound does not create any immediate regulatory obligations, but continued policy uncertainty makes long-term investment planning more difficult. Firms considering CBDC-related products or infrastructure should monitor developments alongside wider reforms to stablecoins and tokenised payments.
Next steps
- Monitor publication of the 2026 blueprint and any joint Bank-HM Treasury announcements on next steps
- Review the Phase 2 demos and the forthcoming final Phase 2 update, particularly aliases, Confirmation of Payee, ESIP connections and programmability features. Consider how they map to your own propositions
- Firms considering a PIP or ESIP role should prepare to engage through Bank–HMT consultation and working groups if the decision is to proceed
🟩 Long-term/indicative
Payments Forward Plan
A joint publication from HM Treasury, the Bank of England, the FCA and the Payment Systems Regulator, setting out a coordinated three-year regulatory roadmap for UK payments.
The Payments Forward Plan provides a consolidated view of planned policy and regulatory activity across UK payments, building on the National Payments Vision. Rather than introducing new requirements, it brings together key reforms across retail and wholesale payments and digital assets, including safeguarding, open banking, stablecoins, BNPL, RTGS settlement hours and the digital pound. It is intended to help firms plan for forthcoming regulatory changes and improve coordination among regulatory authorities.
Key dates
- 2026: Open Banking long-term regulatory framework; BNPL and stablecoin developments
- September 2027: RTGS settlement hours extension (subject to final confirmation)
- 2027: UK crypto regime comes into force
- Ongoing: Digital pound design and related policy work
Why it matters
The Plan does not create new obligations, but highlights significant forthcoming reforms across the payments landscape. Firms should use it to anticipate future regulatory change and plan engagement with consultations and implementation programmes.
Next steps
- Review the Plan alongside your firm’s product, technology and compliance roadmap.
- Identify the reforms most relevant to your business and monitor key consultation and implementation milestones.
- Use the Plan to prioritise regulatory engagement and resource planning.