The Government has released a package of policy papers to coincide with the Chancellor’s latest Mansion House speech. Key themes are how the industry should respond to technological developments, including AI and tokenisation, and how regulatory change can support growth in financial services.
A plan to encourage AI adoption in financial services
HMT has welcomed an independent report proposing an AI Adoption Plan for financial services. The plan makes ten recommendations including:
regulators establishing a clear, accessible single source of cross-regulator AI guidance, including guidance on how existing frameworks like the Consumer Duty and Senior Managers regime apply to common AI and agentic use cases,
the Financial Conduct Authority reviewing the consumer and competition impacts of financial guidance and advice-like outputs from general-purpose large language models to inform HMT’s consideration of the regulatory perimeter, and
public-private collaboration to develop a trust framework for agentic payments covering legal liability, “Know Your Agent” protocols and machine-to-machine authentication standards.
The report also proposes a sector-wide AI skills plan coupled with reforms to attract global AI talent.
Committing the industry to bridge AI skills gaps
The Financial Services Skills Commission has published a “skills compact” for financial services. Signatories are asked to commit to four actions:
ensure their UK workforce is future-ready by upskilling them in AI and other critical skills over a rolling three-year period,
maintain and/or grow structured routes into their organisation for new talent,
assign one member of their senior executive team as responsible for closing skills gaps, and
publish annual updates on progress against these commitments.
The compact provides more detail about the required actions, including naming the specific critical skills by 30 November 2026.
A streamlined rulebook for asset managers
The Government intends to simplify the regulatory framework for alternative investment fund managers, such as hedge funds and private equity funds. It invites technical comments on a draft statutory instrument to replace the AIFM Regulations 2013. The deadline for feedback is 14 October 2026.
The FCA is also consulting on new rules for AIFMs:
Its consultation CP26/28, which proposes changes to the UK AIFM regime, generally closes on 14 October 2026 except for some discussion chapters for which feedback is due by 18 September 2026.
FCA CP26/26, which closes on 22 September 2026, aims to simplify how asset management firms report fund data.
FCA CP26/27 seeks views on proposals for a simpler remuneration regime for AIFMs, UCITS management companies and MIFIDPRU investment firms until 16 September 2026.
We will publish a blogpost with further details on these proposals in due course.
Major update to payment services regime
HM Treasury has launched a consultation on modernising payment services regulation. The proposals include bringing UK-issued stablecoins into the scope of the Payment Services Regulations, rather than the incoming crypto regime.
HMT also seeks views on:
how the regime needs to change in response to agentic payments,
introducing senior management requirements for payment and e-money institutions, and
empowering the FCA to support innovation in Open Banking.
An agenda for updating wholesale digital markets
A report from the UK’s Wholesale Digital Markets Champion argues that tokenised markets are fundamental to the future of financial services. To drive implementation, the report identifies ten key priorities including:
tokenised collateral to support the development of tokenised markets,
establishment of a tokenised funds market,
wholesale payment rails that support tokenised markets, and
regulatory standards that support tokenised markets.
The report assigns responsibility for these priorities to a newly established Taskforce composed of over fifty firms from across industry, organised into nine Action Groups. An Orchestrator Group, led by the Digital Markets Champion, will coordinate practical delivery. The initial focus is on executing an end-to-end repo transaction on blockchain to demonstrate ecosystem-wide interoperability and cross-border testing over the next twelve months.
Taskforce to advance UK-US financial services
Following the launch of the Transatlantic Taskforce in September 2025, recommendations have been published setting out a forward-looking agenda, focusing on digital assets and capital markets. Recommendations include:
exploring opportunities for collaboration to support and enhance transparency between the UK and US consolidated tapes, and
exploring policy frameworks for digital financial services, in which stablecoins, tokenised deposits, other forms of digital money can coexist.
Alongside the report, the UK and US have published a joint statement on stablecoins which sets out a shared UK-US view to support a cross-border stablecoin market. Among other things, the two countries:
affirm that reserve, liquidity, and other prudential requirements for stablecoins should seek to mitigate risks while avoiding unnecessary fragmentation,
endorse the use of well-regulated stablecoins in payments, settlement and tokenised financial markets, and
intend to explore formal mechanisms for stablecoins issued in each jurisdiction to access the market of the other.
Update from dematerialisation taskforce
The Dematerialisation Market Action Taskforce has been set up to take forward reforms to the UK’s shareholding framework. DEMAT has published an implementation plan for removing paper share certificates from the UK shareholding framework which includes a roadmap of legislative actions for the Government to take.
HMT says that it will legislate to remove paper shares and mandate digital registers before the end of 2027.
Cloud service providers brought under regulatory oversight
The Government has designated four tech firms as critical third parties. This designation means that the Bank of England, Prudential Regulation Authority and Financial Conduct Authority will oversee the critical services they provide to the UK financial sector.
Read our blogpost for more: UK designates four tech firms as critical to financial system
More reform to come on ring-fencing
The Financial Services and Markets Bill, which is currently going through Parliament, will amend primary legislation relating to the UK’s ring-fence for retail banking activity. Now a new HMT consultation proposes additional reforms to secondary legislation.
The proposals cover four main areas:
A New Growth Allowance will permit ring-fenced bodies (RFBs) to undertake otherwise prohibited activities up to a certain limit.
The permitted derivatives that RFBs may offer customers will be expanded in line with the Basel 3.1 framework.
The range of permitted counterparty exposures will be broadened.
RFB defined benefit pension schemes will be permitted to transfer surplus to defined contribution schemes within the wider banking group, subject to safeguards.
The consultation closes on 8 September 2026. HMT intends to publish a draft statutory instrument for feedback with the final instrument to be laid in 2027.
The PRA is also consulting on removing certain rules from its rulebook relating to RFBs. PRA CP10/26 closes on 14 October 2026.
Expansion of Growth Guarantee Scheme to accelerate Open Finance
The British Business Bank’s Growth Guarantee Scheme, which provides a 70% government guarantee on loans to small and medium-sized businesses of up to £2 million, is to be extended to facilitate an additional £2 billion of SME lending per year by 2028/9. In other changes, the maximum term length of a loan will be increased from six to 10 years for loans of up to £1.1 million, and the maximum size of businesses that are eligible for a loan will rise from £45 million in annual turnover to £54 million.
Background
The Chancellor, Rachel Reeves, dubbed last year’s Mansion House speech the “Leeds Reforms”. Several of the initiatives announced then have since been picked up in the Financial Services and Markets Bill 2026. It also included the publication of the Government’s Financial Services Growth and Competitiveness Strategy. This year’s package includes an update on progress made under that strategy one year on.
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