Delivering The Leeds Reforms (And More): Financial Services And Markets Bill Introduced In Parliament

The Bill aims to deliver key aspects of the Leeds Reforms, drive modernisation of regulation of the financial services sector, enable growth, and make consumer protections and redress fit for the digital age.

Overview of the Bill

The purpose of the Bill is to deliver key aspects of the Leeds Reforms announced by the Chancellor in her second Mansion House speech in July 2025; we covered the Chancellor’s address in our article, Rewiring the financial regulatory system: the Leeds Reforms and Mansion House 2025 speech. The Bill is also intended to drive modernisation of regulation of the financial services sector, enable growth, boost lending capabilities and make consumer protections under the financial services redress scheme consistent and appropriate to the digital age.

Specifically, the Bill includes provisions relating to the following topics (we have set these out following the order in which they appear in the Bill): 

CCA reform

HM Treasury confirmed in a policy statement published shortly before the Bill was introduced that the government would be legislating to deliver the next phase in its reform of the Consumer Credit Act 1974 (CCA) and related secondary legislation. Briefly, the Bill repeals certain CCA provisions in three key areas: information disclosure requirements; sanctions attached to certain information disclosure requirements; and rights and protections. This will enable the FCA to consider what requirements should be put in place (as appropriate and subject to consultation). Certain other CCA provisions will be retained, either with necessary amendments or, in more complex cases, with no changes at this stage. For more information, see our article, HM Treasury pitches base camp at the mountain of consumer credit reform. 

Credit union common bond

In March 2026, the government published the response to its call for evidence on credit union common bond reform in Great Britain, announcing it would legislate to reform the common bond, enabling credit unions to expand by improving the rules on who can become a member. The Bill includes provisions to achieve this. Credit unions will have the option to adopt these reforming measures in their rules.

Access to banking services

The Bill gives HM Treasury the power to act on access to banking services. This power would allow the government to introduce targeted secondary legislation or empower the FCA to make rules at a future date if there is evidence it needs to do so to ensure reasonable access to in-person banking. At this stage, the power is broad because HM Treasury has recently commissioned an independent review on access to banking services, which will not report with any recommendations until October 2026. However, the government expects to narrow the power once the review has concluded.

FOS and consumer redress system reforms

Following consultation (see our article, Modernising the redress system: Fair and reasonable changes? for a discussion of the consultation proposals), the government confirmed in March 2026 that it would legislate to make significant reforms to the framework in which the Financial Ombudsman Service (FOS) operates. The reforms are designed to modernise consumer protections and redress arrangements to make them appropriate to today's markets and the digital age, bringing clarity and consistency for consumers and businesses. The reforms include: adapting the FOS' 'fair and reasonable' test; introducing a 10-year limit for bringing a complaint to the FOS; clarifying the roles of the FOS and the FCA in relation to mass redress events (MREs); providing the FCA with appropriate tools to act more quickly to deliver a regulatory response to MREs; and simplifying the statutory test under section 404 of the Financial Services and Markets Act 2000 (FSMA). 

Consolidating the PSR within the FCA

The Bill will abolish the Payment Systems Regulator (PSR) and transfer its functions to the FCA (the government confirmed this in April 2026). The functions that will be provided to the FCA under the Bill are intended to replace and be generally equivalent to the substance and scope of the PSR’s current functions; the government considers that this streamlining of payments systems regulation will enable stronger coordination and more defined responsibilities, resulting in clearer accountability, faster decision-making and better support for innovation. 

Reforms to AML/CFT supervision

The Chancellor announced in October 2025 that the FCA will assume responsibility for anti-money laundering (AML) and countering the financing of terrorism (CFT) supervision of all relevant persons carrying out activities within scope of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). The Bill will introduce legislative amendments to achieve this and provisions to fund the FCA's preparatory work. It will also make related minor amendments to the Sanctions and Anti-Money Laundering Act 2018.

Adjusting the FPC's statutory minimum meeting frequency

Currently, under the Bank of England Act 1998, the statutory minimum meeting frequency of the Financial Policy Committee (FPC) is 'at least four times' per year. The Bill will reduce this by one meeting to 'at least three times' per year. The explanatory notes state that, in practice, the FPC is expected to remove the Q3 round (which typically takes place in September), while retaining the ability to convene additional meetings as appropriate. 

Improving the FCA's and PRA's operational effectiveness

In line with the government's Financial Services Growth and Competitiveness Strategy and the aims of its Regulation Action Plan, the Bill will make a number of reforms to the framework for the FCA and the PRA, relating to:

• Statutory deadlines (under FSMA) for determining key regulatory applications: these will be made more stringent to reflect progress by the regulators and the importance of promptly determining applications. HM Treasury will be given the power to make modifications (through secondary legislation) to these new deadlines, as well as to set different deadlines in relation to different regulated activities.
• Production of long-term strategies: the Bill introduces a statutory requirement for both regulators to produce long-term strategies at least once every five years, setting out their strategic priorities in relation to (i) their objectives; and (ii) the supervision of authorised persons and regulation of participants in regulated payment systems (in the case of the FCA), or the supervision of PRA-authorised persons (in the case of the PRA). The Bill also sets out the matters to which the regulators must have regard in preparing or revising a strategy. 
• Application of FCA and PRA 'have regards': the Bill will amend FSMA to require the regulators to have regard to both the eight regulatory principles set out in section 3B of FSMA, and HM Treasury’s recommendations within its remit letters, when preparing or revising their long-term strategies. (The current position is that the regulators must have regard to them when carrying out their general functions, including rule-making.) The government also intends to take forward secondary legislation to remove the requirement for the FCA and PRA to consider the regulatory principles in the Legislative and Regulatory Reform Act 2006, and the associated Regulators' Code, when carrying out their day-to-day regulatory functions. 
• Competitiveness and growth objective reporting: both the FCA and the PRA will be required to report at least annually to HM Treasury setting out how they have complied with their duty to advance the secondary competitiveness and growth objective (introduced to FSMA under the Financial Services and Markets Act 2023). This reporting may not be combined in a single document with any other report.
• Procedural and administrative requirements on the FCA, PRA and the Bank of England (BoE): the Bill will remove or streamline a number of reporting and other statutory requirements, some of which are duplicative or of lower value, while others are considered overly burdensome. The majority of existing statutory requirements that support transparency and oversight of the regulators will be retained. In addition, there will be clarificatory changes to the warning/decision notice procedure for permission applications, and changes to the governance procedures for meetings of BoE and PRA committees and the FCA Board, to support their effective functioning.
• Creation of a 'provisional licences' authorisation regime for firms seeking FCA authorisation: the Bill will introduce provisions to deliver this regime, under which eligible firms will be able to apply for FCA authorisation to undertake limited regulated business under close supervision for a defined, time-limited period. The FCA will be empowered to grant firms temporary Part 4A permissions where it assesses they will meet the Threshold Conditions during the provisional licence period. The aim is for such firms to work towards, and achieve, full authorisation. The Bill further grants the FCA powers to make rules specifying regulated activities within scope of the regime, and HM Treasury powers to make regulations to further specify elements of the regime and make changes to Part 4A of FSMA, as appropriate.

Reforms to the appointed representative (AR) regime

The Bill will make targeted changes to the legislative framework for the AR regime, to improve its safe operation. In particular, the Bill: 

• introduces a new regulatory gateway for principal firms, under which an authorised firm seeking to act as a principal will be required to apply for and obtain permission from the FCA;
• simplifies the exemption for ARs in section 39 of FSMA by removing the requirement for AR contracts to comply with requirements set out in regulations, as well as requirements concerning the inclusion of ARs carrying on certain types of business on the Financial Services Register;
• repeals obsolete provisions for tied agents;
• extends the compulsory jurisdiction of the FOS to ARs; and
• brings ARs within the scope of the Senior Managers and Certification Regime (SMCR) (currently, the earlier Approved Persons Regime framework applies to ARs).

SMCR reforms

To reform the SMCR, the Bill will amend the statutory framework, including removing the Certification Regime, which will enable the regulators to set requirements relating to the assessment of staff, using their existing general rule-making powers. There will also be targeted changes to aspects of the Senior Managers Regime and the Conduct Rules. The goal is to ensure the SMCR imposes a proportionate administrative burden on firms without compromising on core protections under a strong individual accountability framework. For more detail on this change and the implications for firms, see our article, The King’s Speech: SMCR reform moves forward. 

Overseas recognition regimes (ORRs)

Currently, HM Treasury’s powers to create ORRs are restricted to areas of assimilated or restated EU law. As a result, it is unable to respond to regulatory developments (such as the provision of ESG ratings, digital assets and stablecoins), posing competitiveness risks for the UK and potential future restrictions on UK firms in respect of cross-border activity. The Bill will therefore create a new framework for HM Treasury to make ORRs for any financial services activity, using the existing ORR model, where there is a potentially comparable regime in an overseas jurisdiction. HM Treasury intends to exercise this power through a statutory instrument, which would specify the scope of the ORR, the effect of a designation under the ORR, and include a schedule recording overseas jurisdictions designated. The regulators will set firm-facing requirements through their rulebooks and be responsible for firm-level supervision under each ORR.

Gibraltar Authorisation Regime (GAR)

The GAR framework was established under the Financial Services Act 2021, which amended FSMA. It has not yet been implemented. Under the GAR, the access of Gibraltar-based firms to the UK market will be based on three conditions that HM Treasury must periodically reassess, one of which is alignment of Gibraltar law and practice with that in the UK. The Bill will amend the current test that HM Treasury needs to satisfy, to both bring the test into line with updated, wider HM Treasury policy on recognition, and enable the GAR to be brought into force for certain activities without the statutory assessment required. The other conditions (compliance with certain specified objectives and cooperation of Gibraltar authorities with UK authorities) will apply unchanged and all three conditions will continue to apply once the GAR is in force.

Bank ring-fencing regime reform

The review of the bank ring-fencing regime, carried out by HM Treasury in close collaboration with the BoE, recently reported. It identified structural issues within the statutory framework (i.e. FSMA and related legislation) that must be addressed through primary legislation. The Bill therefore makes targeted amendments to FSMA to modernise the ring-fencing regime statutory framework, introducing greater flexibility and ensuring it can evolve in line with developments in prudential regulation, the UK’s bank resolution framework and firms’ business models. The review also identified further reforms to be taken forward (subject to consultation) through secondary legislation and PRA rule changes, once the Bill has received Royal Assent.

Enhancing the commercial credit data sharing (CCDS) scheme

The government is seeking to reform the CCDS scheme so that it reflects, and operates in line with, the current landscape for SME finance. Through the Bill, the government will make targeted changes to the Small Business, Enterprise and Employment Act 2015, enabling the detail of the CCDS scheme changes to be delivered through amendments to the Small and Medium Sized Business (Credit Information) Regulations 2015. 

Transformer and insurance vehicles

Following consultation, the government confirmed in April 2026 that it would legislate to make targeted changes to the existing regulatory framework for the risk transformation and captive insurance markets. The Bill will amend section 284A of FSMA, which empowers HM Treasury to make regulations for specialist undertakings known as transformer vehicles. The amendments will:

• remove constraints on the scope of potential funding mechanisms that can be used by transformer vehicles; and
• create a new power for HM Treasury to make regulations to facilitate or regulate the establishment and operation of insurance vehicles. This will enable it to regulate to establish insurance vehicle protected cell companies for the purpose of carrying out or effecting contracts of insurance. This power will mirror HM Treasury's existing power for transformer vehicles and allow for the creation of a wide range of cell companies.

Seizure powers over illicit cryptoassets

The Bill empowers the Secretary of State or HM Treasury to amend and update, by secondary legislation, specified provisions in the Proceeds of Crime Act 2002 (POCA), the Terrorism Act 2000 (TACT) and the Anti-terrorism, Crime and Security Act 2001 (ATCSA), as amended by the Economic Crime and Corporate Transparency Act 2023 (ECCTA), that support the recovery of cryptoassets. This power may be exercised: to extend the application of the relevant provisions to apply them to cryptoassets or cryptoasset service providers (CASPs) that would not otherwise fall within scope; to ensure that the relevant provisions continue to reflect developments in technology and the market for cryptoassets and CASPs; and to reflect the regulation of cryptoassets or CASPs in the UK or elsewhere.

Next steps

As can be seen from our summary, the scope of the Bill is broad and its measures are wide-ranging. It includes a number of areas where reforms have been consulted on and confirmed, and where the government has indicated its intention to legislate 'when Parliamentary time allows'. 

The Bill will bring in some significant changes to primary legislation and, as the Bill has its basis in the Leeds Reforms and the government's Financial Services Growth and Competitiveness Strategy, the emphasis on reducing unnecessary burdens on industry, boosting competitiveness and delivering growth is clear. 

Since the government has chosen to start the Bill in the Lords, rather than the Commons, it would appear it does not consider the Bill to be particularly politically sensitive. As the Bill undergoes scrutiny, the composition of the Lords and the process in that chamber is such that members with relevant expertise will have the opportunity to engage with its provisions. This may result in a well-drafted text (with less scope for unintended consequences) leaving the Lords and, potentially, a Bill which attracts less criticism and fewer amendments in the Commons.

Second reading, where there will be a general debate on all aspects of the Bill, is scheduled for 8 June 2026.

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