HM Treasury's Payments Revolution: What the New Consultation Means for Fintech

HM Treasury published what may prove to be the most consequential consultation in UK payments regulation since the Payment Services Regulations 2017. The proposals are ambitious, far-reaching — and, for the fintech sector, potentially transformative.

Three objectives, one reform programme

The consultation bundles three distinct but interconnected strands into a single overhaul: shifting to an FCA-led regulatory model, building a framework for tokenised and AI-driven payments, and establishing a permanent commercial and regulatory architecture for Open Banking. That HMT has chosen to address all three together is itself significant. It signals that the government views payments, tokenisation, data access and AI not as separate policy domains but as components of a single evolving ecosystem.

From legislation to the FCA Handbook

The most structural change concerns who writes the rules. Under the current PSRs and EMRs, detailed requirements on authorisation, conduct, safeguarding, prudential resources and liability sit in primary legislation — slow to amend, difficult to adapt. HMT proposes retaining the regulatory perimeter, key definitions and core consumer protections in statute while delegating operational and technical requirements to the FCA Handbook.

This follows the broader trajectory of UK financial services reform post-Brexit, where the FCA and PRA have been given increasing responsibility for granular rule-making. The upside is agility: the FCA can update rules through consultations and handbooks far more quickly than Parliament can amend secondary legislation. The trade-off is uncertainty. Firms will face more frequent regulatory change and a heavier reliance on supervisory judgement rather than clear statutory text.

For payment institutions and e-money firms, the practical question is where the line between legislation and FCA rules will ultimately fall. Expect firms to push for legislative certainty on matters that determine permissions and liability, whilst welcoming flexibility on technical, fast-evolving requirements.

The "multimoney" payments ecosystem

Perhaps the most forward-looking element of the consultation is its treatment of tokenised payments. HMT is not proposing a separate regulatory regime for blockchain-based settlement. Instead, it wants to make the existing list of regulated payment services technologically neutral — so that the same payment permission, in principle, covers fiat transfers, tokenised deposits and qualifying stablecoins.

The term HMT uses is "multimoney": an ecosystem where different forms of value coexist within a single regulatory framework. It is an elegant concept, but the devil is in the implementation. Banks offering tokenised deposits will need clarity on how consent, authorisation, execution and liability apply when transfers run through distributed ledgers or smart contracts rather than traditional payment rails. Firms will likely need a variation of permission before offering tokenised services, giving the FCA a gateway to assess technology-specific risks.

On stablecoins, the approach is pragmatic. UK-issued qualifying stablecoins — already subject to forthcoming FCA rules on backing assets and redemption — would be treated as "money-like" instruments within the payments perimeter. Stablecoins issued in recognised overseas jurisdictions could receive the same treatment. Everything else falls under the cryptoasset regime due to come into force in October 2027. The message is clear: regulatory equivalence will matter.

Agentic AI enters the frame

The consultation also asks what framework should govern agentic AI in payments — systems that can initiate, execute and settle transactions autonomously. This is early-stage policy thinking, and HMT is openly soliciting views rather than proposing concrete rules. But the fact that it is being raised at all in a payments consultation tells you where the government expects the technology to go. Payment providers and AI developers should engage now; the framework that emerges will shape the competitive landscape for years.

Open Banking gets a permanent home

The current Open Banking framework is a patchwork: PSR obligations layered on top of the CMA's Retail Banking Market Investigation Order, with no clear long-term governance structure. HMT proposes consolidating this into a single FCA-supervised regime, complete with provisions for charging for account-access services, industry-led commercial schemes and a future central standards body for technical and operational standards.

This is overdue. Open Banking has operated in a kind of regulatory limbo since its inception, dependent on CMA enforcement and voluntary industry cooperation. A dedicated framework would give providers greater commercial certainty and the FCA proper supervisory tools. The question of charging is politically sensitive — consumers have come to expect free account access — but sustainable business models require sustainable revenue, and HMT appears willing to confront that tension.

Enhanced accountability

Finally, HMT is considering extending the Senior Managers and Certification Regime (SMCR) style individual accountability requirements to payment and e-money firms, particularly around financial crime. This should not surprise anyone given the direction of travel across UK financial regulation, but it will impose significant governance uplift on smaller payment institutions that have, to date, operated under a lighter-touch regime.

What comes next

The consultation closes on 6 October 2026. Detailed rules will follow through subsequent legislation and FCA consultations, meaning the full picture will not emerge until well into 2027 at the earliest. Payment providers, cryptoasset firms and Open Banking participants should use the consultation window to shape outcomes rather than react to them.

The UK has an opportunity to build a genuinely modern payments framework — one that does not merely digitise legacy rules but is designed for a world of tokenised value, autonomous agents and real-time data sharing. Whether it seizes that opportunity depends on the quality of engagement between now and October.