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 the UK payments framework (assimilated law)
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.
The programme will replace much of the existing Payment Services Regulations and Electronic Money Regulations with a more flexible regulatory framework. The reforms are expected to cover areas including Open Banking, stablecoin payments, Strong Customer Authentication (SCA), tokenised payments and financial inclusion, while considering how the framework should support emerging technologies such as agentic AI.
Key dates
- Q2 2026: HMT consultation expected on payments law reform, including Open Banking and stablecoin payments
- Q2 to Q4 2026: FCA engagement on the development of future Handbook rules
- 2027 to 2028: FCA consultations and policy statements; HMT to introduce legislation
Potential impact
The reforms will reshape the UK’s payments regulatory framework over several years, creating uncertainty as the new regime develops. Firms involved in stablecoin payments should also monitor how the reforms interact with the wider cryptoasset regime, while future changes to SCA and Open Banking could require operational changes.
Next steps
- Respond to the HMT consultation once published, particularly on Open Banking, SCA and stablecoin payments.
- Map current Payment Services Regulations and Electronic Money Regulations obligations against the proposed FCA rulebook.
- Monitor how the reforms interact with the cryptoasset regime and participate in the FCA engagement process where relevant.
🟧 Important, uncertain timing/impact
Safeguarding: FRC exposure draft on a dedicated safeguarding assurance standard
The Financial Reporting Council is developing a permanent safeguarding assurance standard to support audits of payment and e-money firms under the FCA’s new safeguarding regime.
The Financial Reporting Council is developing a permanent safeguarding assurance standard to support audits of payment and e-money firms under the FCA’s new safeguarding regime.
Following the introduction of the FCA’s Supplementary Regime in May 2026, the FRC is developing a dedicated safeguarding assurance standard to replace its interim guidance. The new standard will form part of the existing CASS Assurance Standard and establish the assurance approach auditors will use for safeguarding reviews under the new regime.
Key dates
- Winter 2026: FRC consultation on the draft safeguarding assurance standard
- Spring 2027: Final safeguarding assurance standard expected
- Q4 2027 (earliest): FCA consultation on the Post-Repeal Regime
Legal issue/risk
Until the new standard is finalised, firms and auditors will continue to rely on interim guidance, creating the potential for differing audit approaches during the transition to the permanent safeguarding regime.
Next steps
- Monitor the FRC consultation and consider responding, particularly on scope and proportionality.
- Engage with your safeguarding auditor to understand how the interim guidance is being applied.
- Use findings from the first audit cycle to strengthen safeguarding controls ahead of the permanent assurance standard.
🟧 Important, uncertain timing/impact
RTGS and CHAPS settlement hours–early morning extension (EME)
The Bank of England has confirmed that CHAPS settlement hours will be extended, with the system opening at 01:30 on the renewed RTGS platform (RT2) from September 2027.
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.
- Consider responding to the Bank’s wider consultation on extending RTGS and CHAPS settlement hours.
🟧 Important, uncertain timing/impact
Extending RTGS and CHAPS settlement hours–next steps towards near 24x7 settlement
The Bank of England is consulting on the next phase of extending RTGS and CHAPS settlement hours, building towards near 24x7 settlement following the confirmed early-morning extension in September 2027.
The consultation seeks views on the policy, operational and technical changes needed to extend settlement hours. The Bank is considering two approaches: introducing weekend and selected bank holiday settlement, followed by longer operating days, with the long-term aim of moving towards near 24x7 settlement. No decisions have yet been made, and the consultation will help shape the implementation roadmap.
Key dates
- 10 August 2026: Consultation closes
- September 2027: Early-morning extension takes effect (CHAPS opens at 01:30)
Operational impact
While there are no immediate regulatory changes, extended settlement hours will have significant operational implications for direct participants, including liquidity management, operational resilience, staffing and technology.
Next steps
- Consider responding to the consultation if your organisation will be affected.
- Assess how the proposed operating models align with your liquidity, treasury and operational requirements.
- Begin planning for the operational, technology and staffing implications of extended settlement hours.
Consolidating the Payment Systems Regulator (PSR) into the FCA—consultation response published
The FCA will take on the responsibilities of the Payment Systems Regulator (PSR), creating a single regulator for UK payment systems.
Following its consultation, HM Treasury has confirmed it will transfer the PSR’s responsibilities for promoting competition, innovation and the interests of payment service users to the FCA. The Government intends the FCA’s powers to be broadly equivalent to those currently exercised by the PSR, while integrating them into the wider FSMA framework. Operational integration between the two regulators is already underway, with legislation to follow.
Key dates
- Primary legislation: Timing to be confirmed
- 2026: Operational integration continues
- 2027 to 2028: FCA consultations and policy statements on the future payments framework
Why it matters
There is limited immediate impact for firms, as the Government intends a “lift and shift” approach that preserves existing regulatory obligations. However, firms should monitor the legislation and FCA guidance for any changes to regulatory powers, access regimes or appeals.
Next steps
- Continue to comply with existing PSR directions, requirements and reporting obligations.
- Monitor legislation and FCA transition guidance as responsibilities transfer.
- Engage with future FCA consultations on the development of the payments regulatory framework.
🟧 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
- Q3 2026: PRISM taskforce reports on priority use cases
- 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
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
Legal issue/risk
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.
đźź© 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
- H2 2027: RTGS settlement hours extension (target)
- 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.
đźź© 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 digital pound remains in the design and assessment phase. A blueprint is expected in 2026 to support a joint policy decision, while the Digital Pound Lab continues to test potential use cases and technical designs. The Bank has indicated that it remains open to different approaches to modernising UK payments, including improvements to commercial bank money and stablecoins, meaning the future direction of a UK retail CBDC remains uncertain.
Key dates
- 2026: Blueprint to support a policy decision
- Ongoing: Digital Pound Lab Phase 2
Why it matters
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.
- Consider participating in the Digital Pound Lab where relevant.
- Keep digital pound developments under review alongside broader payments modernisation and digital asset initiatives.