UK expands FCA Role in open banking, payments

By Aarav Garg

The UK government has announced a new package of measures aimed at modernising the country’s payments sector, as part of efforts to support rapid financial innovation and maintain its position as a leading FinTech hub.

Unveiled during Fintech Week in London, the initiative focuses on creating a more streamlined and adaptable regulatory framework while maintaining strong consumer protections. Economic Secretary to the Treasury, Lucy Rigby, is expected to promote the measures as part of the government’s broader strategy to attract and scale FinTech businesses.

A key element of the plan is the integration of payment services and electronic money regulation into a single framework aligned with the UK’s wider financial services regime. This approach is intended to cover both traditional and emerging forms of payments, including tokenised assets and stablecoins. The government also plans to formally regulate stablecoins used for payments under a new regulated activity.

Economic Secretary to the Treasury, Lucy Rigby, said, “FinTech is true British success story, and we are backing the industry to maintain its competitive edge and go even further and faster in driving growth. Today’s package is our latest stake in the ground as we build a payments ecosystem that is secure, competitive and fully equipped to harness the opportunities created by rapid technological change.”

Regulators are additionally exploring how rules should evolve to address payments initiated by AI-driven systems, reflecting the growing role of automation in financial services. The Financial Conduct Authority is set to receive expanded powers to oversee the future development of Open Banking, particularly new payment solutions within commercial frameworks.

Other measures include proposals to reduce administrative burdens for firms offering stablecoin-based services and plans to consolidate the Payment Systems Regulator into the FCA. The government has also appointed Chris Woolard as Wholesale Digital Markets Champion and committed additional funding to the Centre for Finance, Innovation and Technology.

Pratiksha Pathak, Partner, Head of Payments at RedCompass Labs, commented, “This is a welcome and well-timed move from the UK government as the payments landscape continues to change rapidly. Major banks, card networks and fintechs are already building real stablecoin infrastructure, particularly in cross-border payments, and regulatory clarity has become an urgent need rather than a nice-to-have.”

The reforms form part of a longer-term strategy to strengthen the UK’s competitiveness in financial services and support emerging technologies such as blockchain and digital assets.