The Treasury is set to use next month's King's Speech to legislate a wave of City of London reforms, as the Prime Minister seeks to move past doubts over his leadership. The financial services bill will include scrapping the Payments Systems Regulator and overhauling the Financial Ombudsman Service (FOS), among other measures.
Chancellor's Golden Age Vision
Chancellor Rachel Reeves has promised a "golden age" for the City, pledging to loosen regulation to stimulate economic growth. However, experts warn the UK's financial sector has lagged behind wider economic growth for the past decade, putting these ambitions at a "crucial juncture."
Key Reforms in the Bill
The bill will abolish the Payments Systems Regulator, a policy Reeves and Prime Minister Keir Starmer pitched as cutting "unnecessary regulation." The timeline for its abolition remains unclear; its boss stated in February that staff are operating normally, as he does not expect the body to be dissolved before early next year.
The Treasury also plans a significant overhaul of the FOS, which resolves disputes between consumers and City firms. The reforms aim to slim down the FOS, ensuring it acts as an impartial dispute-resolution service that conducts investigations "quickly and effectively." A public consultation last year found that, in a small but significant minority of cases, the ombudsman acted as a "quasi-regulator."
Certification Regime Scrapped
Legislation is also expected to scrap a divisive certification regime, which requires financial services firms to annually declare that thousands of senior staff are fit and proper.
David Postings, chief executive of UK Finance, told the Financial Times the King's Speech offers an opportunity to deliver an "ambitious financial services bill" to push through these reforms. "The government and regulators are undertaking a major programme of regulatory reform, some of which requires primary legislation," he said.
Political Context
The Prime Minister will use the King's Speech on 13 May to convince voters and his party that he is making progress, following expected damaging local election results on 7 May.
