In brief
HM Treasury has launched a consultation on the future of UK payments regulation, proposing reforms that could fundamentally reshape the UK's payments and e-money regulatory framework. In particular, the consultation considers moving large parts of the existing payments and e-money regime into a Financial Conduct Authority (FCA) rulebook model, alongside reforms designed to accommodate stablecoins, tokenised payments, Open Banking and AI-enabled payment models. The consultation forms part of the Government's broader objective of creating a more agile regulatory framework capable of evolving alongside technological developments and changing market practices.
In more detail
There are a number of key proposals in the consultation:
- HM Treasury proposes to transfer several regulatory requirements from legislation into the FCA Handbook. The intention is that this would create a more flexible and responsive framework, enabling rules to evolve alongside technological developments and market practices. However, certain core concepts, including regulatory perimeter definitions and key consumer protections, would remain in legislation, although it is not yet clear whether this would involve migrating these provisions into the broader Financial Services and Markets Act 2000 regime.
- The consultation confirms the Government's intention to bring certain UK-issued qualifying stablecoins used for payment purposes within the payments regulatory perimeter and to treat them as "money-like" for payments regulation purposes. HM Treasury is also considering allowing authorised issuers of UK-issued qualifying stablecoins to provide payment services without requiring separate permissions, subject to appropriate safeguards. Further legislation is expected to clarify the interaction between the proposed payments regime and the wider cryptoasset framework.
- The consultation seeks views on whether existing requirements relating to consent, authentication and liability for unauthorised transactions remain appropriate where payments are initiated or managed by AI agents.
- HM Treasury proposes a new statutory right of access designed to support Variable Recurring Payments, which are viewed as an important building block for account-to-account payment solutions. The consultation also proposes giving the FCA broader powers over Open Banking infrastructure, standards, and commercial arrangements, potentially establishing a stronger long-term framework for the continued development of Open Banking products and services.
While many aspects of the proposals remain high level and significant implementation details have yet to be determined, the consultation provides the clearest indication to date of the Government's vision for the future of UK payments regulation. The proposals point towards a more FCA-led framework designed to accommodate stablecoins, tokenised payments, Open Banking innovation and AI-enabled commerce, while maintaining appropriate standards of consumer protection and financial stability. The consultation closes on 6 October 2026; firms active in the payments, e-money and digital assets sectors should consider engaging with the consultation process given the breadth and potential significance of the proposed reforms.