King’s Speech 2026: Enhancing Financial Services Bill to deliver key parts of UK’s Leeds Reforms

Enhancing Financial Services Bill

• The Bill – which is reportedly due to be introduced to Parliament in the coming weeks and prioritised in the legislative process - will deliver key parts of the 2025 Leeds Reforms set out by the Chancellor in 2025.
• It will include provisions to enable the already announced reforms to the Financial Ombudsman Service (FOS) (see our article here), Senior Managers and Certification regime (SMCR), and payments regulatory framework in the form of the PSR/FCA consolidation (see our article here).
• As part of measures to support lending and investment, the statutory framework for the ring-fencing regime will be updated.
• In line with the government’s Financial Inclusion Strategy, there will also be credit union reforms aimed at widening access to affordable finance and supporting the government’s aim to double the size of the mutual and co-operative sector.
• Contrary to some predictions, there doesn’t appear to have been any mention of next steps for the proposed provisional licences regime for early-stage financial services firms, the previously announced planned changes/updates to the payments and e-money regulatory framework (including regulation of stablecoins for use in payments), Consumer Credit Act 1974 reform, or strengthening the incentives for tech and telecoms firms to prevent fraud. However, we will have to wait for publication of the Bill to confirm its full scope.

Regulating for Growth Bill

• The Bill builds on the government’s 2025 Regulation Action Plan to modernise regulation in support of growth and innovation while maintaining essential safeguards.
• The key provisions are:
  • Strengthened Growth Duty: This will be aimed at increasing the importance of growth considerations in regulatory decision-making without undermining regulators’ core objectives (e.g. on safety or the environment). This will be supported by a new statutory power for ministers to issue strategic steers, enabling them to define what growth means in different regulatory contexts, including through regulators enabling innovation.
  • Creation of sandbox powers: With a focus on the Industrial Strategy’s growth-driving sectors (which include financial services), the Bill will create cross-economy “sandboxing powers” so that businesses can test cutting-edge new products and technologies (eg in AI and defence technology) safely and then scale up delivery of changes more quickly. Following a successful trial, the Bill will allow the changes to quickly be embedded permanently into law. Regulatory sandboxes are already widely used by the financial services regulators (eg the FCA’s ‘Innovate’ initiative), but the cross-sector aspect here appears to be new and might open up different opportunities for financial services firms to collaborate with other priority sectors such as clean energy, defence, and digital & technologies.

Other new legislation of potential interest to financial services firms

• Competition Reform Bill to make market reviews quicker (18-24 months on average, instead of the current 3+ years) and more focused, provide more clarity and flexibility in merger reviews, and improve decision-making at the CMA.
• Digital Access to Services Bill to establish the legal framework for the government to create, issue and use Digital ID, including provisions to enable its use in priority areas across the public and wider economy – reportedly due to be published in late Autumn this year.
• Cyber Security and Resilience Bill (carried over from the previous parliamentary session) to expand the remit of existing regulations to better protect more of the core services people and businesses rely on, including managed IT companies and data centres, with regulators given new powers to designate critical suppliers to the UK’s essential services. Organisations in scope will also need to report a greater range of harmful cyber incidents to their regulator and the National Cyber Security Centre (NCSC) within 24 hours, with a full report within 72 hours. Enforcement will also be modernised, including tougher turnover-based penalties for serious breaches.
• National Security Bill to reform the cyber landscape, including by updating the Computer Misuse Act 1990.
• Energy Independence Bill to reform market, planning and regulatory frameworks to accelerate the deployment of clean power including offshore wind, hydrogen and smart grid technologies.
• While the current focus of the European Partnership Bill does not appear to be on financial services, the Bill will provide a framework of powers to ensure agreements with the EU can be implemented now and in the future - including a power to extend the application of the Bill to new treaties with the EU. The government believes further alignment could support even more prosperity for the UK.

What’s next and how can Hogan Lovells help?

As mentioned above, we could see the Enhancing Financial Services Bill being introduced to Parliament in the coming weeks. Hogan Lovells’ depth and breadth of knowledge of the legal, regulatory and policy drivers affecting financial services means that we can help you to capitalise on further opportunities to shape your regulatory and policy environment as work on this and the government’s other legislative announcements progresses. Our Financial Services Regulatory and Administrative Law and Government Affairs teams are ready to speak to you.

Authored by Virginia Montgomery.