Payments and Fintech

Next generation retail payments infrastructure

The UK National Payments Vision is moving into the delivery stage, with the Payments Vision Delivery Committee (PVDC) (a committee chaired by HM Treasury with senior representatives from the Financial Conduct Authority (FCA), the Payment Systems Regulator (PSR) and the Bank of England (BoE)) publishing its strategy at the end of 2025 for the future retail payments infrastructure in the UK, based on a collaborative public-private model underpinned by five strategic outcomes:

• greater choice of innovative and cost-effective payment options that meet consumers’ needs (in particular account to account payments);
• payments must operate seamlessly as part of a diverse multi-money ecosystem, with interoperability between new (e.g. stablecoins) and existing forms of digital money;
• consumer and business trust in the protection of payments from fraud / financial crime;
• fair, transparent and non-discriminatory access to the payments infrastructure; and
• operational and financial resilience of the payments infrastructure.

The PVDC will also publish the Payments Forward Plan in 2026 which will set out a sequenced plan of initiatives across the payments ecosystem including initiatives in both retail and wholesale payments, and the role of digital assets.

Additionally, 2026 is likely to see a real ramp up of the work of the new industry owned delivery company which is being established with responsibility for procuring and funding the build and rollout of the infrastructure.

Abolishing the Payment Systems Regulator

On 11 March 2025, the UK government announced its decision to abolish the PSR as part of a broader initiative to reduce regulatory burdens and stimulate economic growth. This will reduce the regulatory burden for payment systems and payments service providers of having to deal with two regulators. Its functions will be integrated into the FCA under the Financial Services and Markets Act 2000, with powers broadly equivalent to those currently held by the PSR.

Changes to the Payment Services Regulations 

The Payment Services Regulations 2017 (PSRs) are being amended by the introduction of new rules requiring payments firms to amongst other things give at least 90 days’ notice before terminating a framework contract (up from the current two months). These enhancements apply to framework contracts for payment services agreed on or after 28th April 2026.

Safeguarding reform for payments and e-money firms

The FCA published its final “interim” rules setting out changes to the safeguarding regime for e-money and payments firms which will come into force on 7 May 2026. These interim rules (which will be included in a new CASS 15) support the existing legislative safeguarding provisions in the Electronic Money Regulations and PSRs with the goal of improving consumer protection. There are three categories of changes that will be introduced under the interim rules, which are: (i) improved books and records, (ii) enhanced monitoring and reporting, and (iii) strengthening elements of safeguarding practices.

The FCA had initially intended to introduce a second stage of proposed reforms (the “end state regime”) which would replace the safeguarding requirements of the EMRs and PSRs with a new “CASS” style regime. However, following extensive industry feedback, such proposals have been paused until the effectiveness of the interim rules have been reviewed at a later stage. 

UK transition to a long term regulatory framework

The UK is moving open banking towards a long term regulatory framework, which will be overseen by the FCA. The FCA published its Feedback Statement (FS25/4) last year on the design of the “Future Entity” for open banking, setting expectations for its role as the standard setting body and how it would sit alongside / enable commercially operated open banking schemes. Following the passing of the Data (Use and Access) Act which established a framework for the sharing of customer data held by payment service providers with authorised third parties, we expect that the legislation setting out the new regulatory framework can and will be put in place imminently in 2026. We also anticipate secondary legislation setting the path for supporting the rollout of commercial variable recurring payments to be introduced in 2026.

Finally, the FCA is also expecting to publish its  roadmap for open finance by March 2026. To support this work, ahead of launching the open finance roadmap and strategy, the FCA has announced a major new partnership with KPMG and Europe. It has also launched two TechSprints, focusing on mortgages and finance for SMEs.

New cryptoasset framework 

On 15 December 2025, the UK government published the draft legislation (Draft Cryptoasset Legislation) that will implement the new cryptoasset regulatory regime in the UK, which will enter into force on 25 October 2027. Cryptoassets will be brought into line with the standards that apply to mainstream financial markets, with certain differences and with the FCA gaining extensive rulemaking and enforcement powers.

In particular, new regulated activities were introduced, and the territorial scope of the new regime will extend to overseas entities to the extent that they provide in-scope services (other than issuing) to UK consumers. Further details could be found in our LawNow article here.

FCA crypto roadmap

The FCA has issued its Crypto Roadmap, setting out the trajectory for FCA rules for the cryptoasset sector once the sector becomes fully authorised, noting in particular that the cryptoasset sector will be subject to full prudential regulation (see our summary here).

Discussion papers and consultation papers which were issued as part of the Crypto Roadmap in 2025 covered:

• Admissions & disclosures – the FCA proposed to largely align the admissions & disclosures rules to the UK’s existing prospectus regime for traditional transferable securities;
• Market abuse – firms (including intermediaries) will need to comply with a bespoke market abuse regime;
• Trading platforms, intermediation, lending and staking – the FCA has set out detailed requirements for firms, including intermediaries;
• Prudential rules – firms will need to meet certain capital requirements as part of the new regime which will be calculated on an individual and group basis; and
• Conduct obligations – firms to apply full conduct rules including conduct of business rules, operational resilience, the senior managers regime and financial crime.

In 2026, we expect the final Policy Statements to be released and we have now had a further consultation paper on consumer duty, product governance, settlement responsibilities for trading platforms, client categorisation rules, safeguarding requirements, general conduct requirements, advertisements and financial promotions, and cross-cutting reporting requirements. We have also had draft guidance to be issued by the FCA on location requirements and how firms should decide whether they should be opting for a subsidiary or subsidiary and branch model.

BoE regime for systemic stablecoins

On 10 November 2025, the BoE published its consultation paper setting out its policy proposals for a regulatory regime governing sterling denominated systemic stablecoins. 

Notably, the potential entities who may be caught by the BoE’s regime are not limited to stablecoin issuers and could include systemic service providers, or those entities providing essential services to a systemic payment system or systemic service provider. A summary of the key proposals and areas to work through can be found in our Law Now.

The consultation paper closes on 10 February 2026, with the BoE’s rules expected  later in the year. In 2026, the BoE will also issue supporting guidance, publish and consult jointly with the FCA on the detailed joint regulatory framework, publish a specific supervisory approach for systemic stablecoins and consult further on the detailed design of the safeguarding regime for in-scope firms.