A series of reforms for the City of London will be confirmed at the forthcoming King’s Speech, as the Prime Minister aims to address concerns about his leadership. The proposed changes, which include the abolition of the payments watchdog and a revamp of the financial ombudsman, will be incorporated into the financial services bill.
Chancellor Rachel Reeves has recently described a “golden age” for the City, promising to ease regulations to boost the UK’s economic hub. However, experts caution that these aspirations are at a “crucial juncture,” noting that the financial sector has lagged behind broader economic growth over the past decade.
The Treasury plans to leverage the King’s Speech to secure legislation for several previously announced reforms to stimulate growth in the City. Among these is the elimination of the Payments Systems Regulator, a move Reeves and Prime Minister Keir Starmer have promoted as a significant step towards reducing “unnecessary regulation.” The timeline for the watchdog’s dissolution remains uncertain, with its leader indicating that operations will continue as usual, as he does not anticipate the body’s abolition before next year.
Additionally, the Treasury has committed to a substantial overhaul of the Financial Ombudsman Service (FOS), which mediates disputes between consumers and City firms. The reforms aim to streamline the FOS to function as an impartial dispute-resolution service, conducting investigations “quickly and effectively.” A public consultation last year revealed that, in some cases, the ombudsman acted as a “quasi-regulator.”
The Treasury is also expected to legislate the removal of a contentious certification regime, which mandates financial services firms to annually declare that thousands of senior staff are fit and proper. David Postings, chief executive of banking trade body UK Finance, has stated that the King’s Speech presents an opportunity to introduce an “ambitious financial services bill” to implement these reforms.
The Prime Minister is anticipated to use the King’s Speech on 13 May to demonstrate progress in governance, following potentially challenging local election results on 7 May.
