A package of City of London reforms, including changes to major regulators, will be included in the King’s Speech next month.
The financial services bill is already being drafted and will be included in the legislative package for the next parliamentary session to be set out in the speech on May 13, according to several officials briefed on the measure.
Legislation is needed to complete several planned reforms to key pillars of City regulation, such as scrapping the payments watchdog and overhauling the financial ombudsman.
“The government and regulators are undertaking a major programme of regulatory reform, some of which requires primary legislation,” said David Postings, chief executive of the banking trade body UK Finance. The King’s Speech was “an opportunity to introduce an ambitious financial services bill that addresses key priorities”, he added.
The Treasury has committed to a number of reforms that require primary legislation. These include merging the Payment Systems Regulator into the Financial Conduct Authority and reforming the Financial Ombudsman Service.
The bill is expected to allow the government to scrap the much-criticised certification regime, which requires financial services companies to check thousands of senior staff are fit and proper every year and record the results on a central directory.
The FCA announced moves to ease the regime this week. But Chancellor Rachel Reeves said she aimed to go further by making more significant changes to the rules, which were introduced after the 2008 banking crisis to make key financial services employees more accountable when things go wrong.
“By removing rigid legal processes that add costs without improving outcomes, we’re creating a simpler, faster and fairer system while ensuring senior managers remain individually accountable,” Reeves said.
The Treasury also announced plans recently to create a new regime for granting provisional licences to early-stage financial companies that allow them to operate for 18 months while they fulfil the requirements of full authorisation. This also requires primary legislation.
Many bank bosses will be hoping the bill includes measures to loosen the ringfencing rules that require investment banking operations to be hived off from consumer-facing activities. However, it is unclear if these changes will be agreed with the Bank of England in time.
City bosses worry the legislation could be the equivalent of opening Pandora’s box, inviting lobbyists and backbenchers to push for it to include many of their pet projects on consumer protection and risk prevention.
Dave Eaton, head of financial services policy at consultants H/Advisors, said it had “the potential to become a Christmas tree, not least because of the number of parliamentarians and industry groups who have their baubles at the ready”.
People briefed on the plans said the bill would receive a priority slot in the next session, which will be opened by King Charles, especially since drafting is under way. Officials briefed on the legislation said it would “streamline regulation and improve competitiveness”.
Reeves has championed the City as a major driver of UK growth and bowed to pressure from international banks not to increase a levy on the sector in her second Budget in November 2025.
The King’s Speech is a vital moment for Sir Keir Starmer’s Labour government, with the prime minister seeking to calm nerves within the party and regain momentum after what are likely to be a dismal set of local election results on May 7.
The Treasury declined to comment..
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