Payments View – May 2026

Welcome back to Payments View. This month regulators and government have very much been looking forward – both from a legislative perspective with the King's Speech (which set the legislative agenda for the year) and proposing reforms to the Consumer Credit Act with a focus on making the perimeter fit for purpose as the market continues to innovate.

This edition of Payments View includes updates on:

• King's Speech and the Financial Services and Markets Bill
• FCA updates approach document and RIG
• PRA dear CEO letter: deposits, e-money and stablecoins
• Bank of England consultation: extending RTGS and CHAPS settlement hours
• PSR consultation on card scheme regulatory financial reporting
• HMT consumer credit act reform

As always, don't hesitate to reach out to us if you would like to discuss any of the developments in this edition.

A quick note to say that the S&S Payments team are at Money 20/20 in Amsterdam. If you're there and want to catch up please let us know.

King's Speech and the Financial Services and Markets Bill

The King's Speech announcing the Financial Services and Markets Bill did not say very much new for firms in the payments space. The headline is the confirmation that the Payment Systems Regulator will be abolished and its functions integrated into the FCA, but it is important to note the wider reforms to the Financial Ombudsman Service, a streamlined Senior Managers and Certification Regime, and changes to the ring-fencing regime.

As readers will know, we have been tracking the PSR consolidation for some time (since the sad news first broke in Spring last year). We will be covering a full breakdown of the remaining aspects of the Bill in an upcoming Insights article.

FCA updates approach document and RIG

The FCA has published an updated version of the Approach Document.

The changes reflect the new rules and guidance on safeguarding and resolution packs in CASS 15 and CASS 10A, safeguarding audits and monthly returns in SUP, and align the guidance with the new framework contract termination rules introduced by the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 (SI 2025/688). The FCA has also updated its webpage on safeguarding requirements for payment institutions and electronic money institutions.

On the Regulatory Initiatives Grid, this has similarly been updated. Much of this has already been announced but with interesting updates on a proposed updated Financial Crime Guide section of the Handbook as well as wider updates on the upcoming cryptoasset regime.

If dedicated horizon scanning leveraging the Grid would be helpful, do of course let us know and we'd be happy to share samples of our current (AI-enabled) product that does just this.

PRA dear CEO letter: deposits, e-money and stablecoins

While the FCA has done away with Dear CEO letters, the PRA is seemingly sticking to the format and has recently published a Dear CEO Letter reaffirming its expectations on innovations in the use by deposit-takers of deposits, e-money and regulated stablecoins. The letter updates and replaces the PRA's November 2023 letter.

The core concern of the PRA is that if retail deposits (FSCS-protected) are offered under the same brand as e-money or stablecoins (not FSCS-protected), problems with one could undermine confidence in the other. Banking groups issuing e-money or stablecoins should ensure the name and presentation clearly differentiate them from deposit products, and the PRA will consider access arrangements and customer information when assessing differentiation. The PRA continues to expect firms to issue e-money and stablecoins from a separate, non-deposit-taking and insolvency-remote entity – though a proportionate transitional period may be permitted where firms have a timely and credible plan.

The PRA considers risks to confidence to be lower where stablecoins are limited to wholesale customers only - a useful signal for firms considering wholesale-only propositions. Firms should keep supervisors informed of material developments in their plans to use digital money or money-like instruments.

We see this as a useful and timely reminder by the UK regulator of the need for clear and consistent client communications across product ranges.

Bank of England consultation: extending RTGS and CHAPS settlement hours

The BoE has published a consultation on its proposed next steps for moving RTGS and CHAPS settlement hours towards near 24x7 operation. As readers will recall, the BoE confirmed in February 2026 that CHAPS will open at 1.30 am (rather than 6.00am) from September 2027. This consultation now looks further ahead.

The BoE is seeking views on two further steps:

• first, an additional settlement day at the weekend (most likely Sundays) and on certain UK bank holidays – not before 2029;
• second, lengthening the settlement window on existing weekdays – not before 2031.

Together, this would extend RTGS operation to 22 hours, six days a week (Sunday to Friday). For the longer term, the BoE also floats 22 hours, seven days a week, or near-continuous settlement (23.5 hours, seven days a week). The operational implications for payments firms - liquidity management, staffing, technology, resilience - are significant. The timelines are not imminent, but the direction of travel is clear and firms will want to start factoring this into medium-term planning. The consultation closes on 10 August 2026.

Separately, Victoria Cleland (BoE Chief Cashier) told the Banknote Conference in Washington that preserving choice in payments - including cash - is essential for financial inclusion, resilience and competition. Burying the lead slightly, she also confirmed that a first consultation on the design of future retail payments infrastructure will be announced "soon" - one to watch.

PSR consultation on card scheme regulatory financial reporting

On 21 May, the PSR published CP26/1 proposing a direction and guidelines on a targeted regulatory financial reporting remedy for Mastercard and Visa, following its market review of scheme and processing fees. This is the latest step in what has become one of the PSR's most significant workstreams and one which it looks to be trying to close out before its abolition.

The remedy is intended to ensure the PSR receives consistent and reliable financial information on the schemes' UK card businesses, addressing what it describes as an information gap preventing it from assessing profitability and market power outcomes. The PSR will keep the scope and operation of the proposed direction under review, noting that further intervention may be needed. For firms across the card payments ecosystem – acquirers, issuers, and merchants who ultimately bear the cost of scheme fees – the resulting data could inform future regulatory action with broader market implications. The consultation closes shortly on 3 July 2026.

HMT consumer credit act reform

HMT has also published its long awaited policy statement on widescale reforms to the Consumer Credit Act 1974. While this sits in the broader consumer credit space, the implications for payments firms offering credit products alongside payment services will be key for firms.

Here, the Government is proposing to repeal many of the remaining CCA provisions and much of the associated secondary legislation – either falling away where they are deemed to no longer be needed or recast where appropriate into FCA rules, subject to any FCA consultations. HMT has largely confirmed its original intent to repeal/recast most CCA requirements into FCA rules, but has changed a number of points in its approach, such as delaying changes to complex provisions and retaining more in legislation than initially envisaged where necessary for effective statutory consumer protection.

We will be following up shortly with a detailed Insights article on the proposals but let us know if you had any questions in the meantime.

In response, the FCA confirmed it will consult on the key elements of the regulatory framework for consumer credit, underpinned by the Consumer Duty. The direction of travel is clear: from statute to Handbook. This should ultimately provide greater flexibility, but firms will need to engage with the FCA's forthcoming consultations to understand the detail.

News Flash

• AMLA published a consultation on draft RTS for home-host supervisory co-operation, covering information exchange, cross-border inquiries, common approaches and practical arrangements.
• The FCA has published a report setting out the findings from a review of firms' financial and trade sanctions systems and controls, covering the work the FCA has carried out since September 2023, including proactive and reactive casework and analysis of reported data.