Payments Forward Plan: UK Regulatory Roadmap

The Payments Forward Plan UK payments regulation Bratby Law

On 26 February 2026, the Payments Vision Delivery Committee published the Payments Forward Plan, the first coordinated regulatory roadmap for UK payments since the National Payments Vision in November 2024. The Plan sets out what the Bank of England, the FCA, the PSR and HM Treasury intend to do across retail payments, wholesale payments and digital assets over the next three years. For payment institutions, e-money issuers, fintechs and their investors, it is the clearest signal yet of how the UK regulatory framework will change, and when.

From the National Payments Vision to the Forward Plan

The Forward Plan is the delivery mechanism for commitments made in the National Payments Vision. That document, published in November 2024, responded to the Future of Payments Review led by Joe Garner in 2023, which identified regulatory congestion, overlapping mandates between the FCA and PSR, and an infrastructure upgrade programme (the New Payments Architecture) that had stalled.

The National Payments Vision established the Payments Vision Delivery Committee, chaired by HM Treasury and comprising senior representatives of the Bank of England, the FCA and the PSR. Its mandate was to coordinate regulatory initiatives and set a sequenced timetable. The Forward Plan is that timetable.

The Plan is structured around three workstreams: retail payments (including open banking and account-to-account payments), wholesale payments (including the Digital Securities Sandbox and wholesale settlement), and digital assets (including stablecoins and the digital pound). Each workstream has dated milestones running to 2028.

Payments law reform: the big rewrite

The most consequential item in the Forward Plan is the wholesale review of UK payments legislation. HM Treasury will publish a consultation in Q2 2026 on the future of UK payment services law, covering the Payment Services Regulations 2017 (PSRs 2017) and the Electronic Money Regulations 2011 (EMRs 2011). Both instruments are assimilated EU law, transposed from the second Payment Services Directive (PSD2) and the second Electronic Money Directive (EMD2) respectively.

The consultation will address several questions that the industry has been pressing for years. First, how should the UK framework accommodate tokenised deposits and stablecoins, which do not fit neatly into the existing PSD2 categories of payment service? Second, does the Strong Customer Authentication (SCA) regime require updating, given the friction it creates for low-risk transactions and the development of biometric and device-based authentication? Third, should regulatory adjustments be made to support payments initiated by autonomous software agents, sometimes described as “agentic AI” payments? This last question sits at the intersection of payments regulation and data protection, raising questions about liability, consent and algorithmic decision-making under the UK GDPR.

Alongside the HM Treasury consultation, the FCA will publish an engagement paper between Q2 and Q4 2026 setting out its approach to the review of assimilated payment services law. The FCA will engage with the sector to provide input into draft handbook rules before formal consultation. A statutory instrument is expected to be laid in Parliament in 2027 or 2028, giving the FCA direct rulemaking power over payment services, replacing the current prescriptive statutory instrument model with a more flexible regulatory framework.

As we noted in our earlier analysis of PSD3 and the UK payments framework, the EU is pursuing its own overhaul through PSD3 and the Payment Services Regulation (PSR Regulation). The Forward Plan confirms that the UK will diverge from the EU approach, building a bespoke framework rather than tracking the European legislation. The pace and direction of that divergence will become clearer once the Q2 2026 consultation is published.

PSR/FCA consolidation

The Forward Plan reaffirms the government’s intention to consolidate the functions of the PSR into the FCA. HM Treasury consulted on this proposal in September 2025, and the consultation response was expected in Q1 2026. Implementation requires primary legislation and is therefore subject to Parliamentary time.

The rationale is straightforward: the current dual-regulator model creates overlap and regulatory congestion. The FCA already authorises payment institutions under the PSRs 2017 and supervises their conduct. The PSR regulates designated payment systems under the Financial Services (Banking Reform) Act 2013. A firm operating a payment system and providing payment services deals with both, a common position for scheme operators and infrastructure providers. Consolidation would create a single point of regulatory contact for most payments firms, reduce duplicative reporting, and align supervisory priorities.

The FCA and PSR published a joint response supporting the principle of consolidation, subject to maintaining the PSR’s current powers over payment system operators and preserving adequate focus on competition and access in payment systems. The Bank of England retains its separate role in supervising systemically important payment systems.

For firms currently regulated by both the FCA and the PSR, consolidation should simplify compliance. The practical question is timing: primary legislation is required, and no bill has yet been introduced. The Forward Plan does not commit to a specific legislative session.

Retail payments infrastructure

The Forward Plan addresses the long-running question of UK retail payments infrastructure. The New Payments Architecture (NPA), originally intended to replace the legacy Faster Payments Service (FPS) and Bacs systems, was effectively paused following the Garner Review’s finding that the programme was not sufficiently agile.

In its place, the Forward Plan sets out a two-track approach. In the short term, proportionate enhancements will be made to the existing FPS and Bacs systems by end of 2026, aimed at improving resilience and supporting innovation in account-to-account payments. In the medium term, a retail payments infrastructure design programme will begin in spring 2026, led by a newly established Retail Payments Infrastructure Board (RPIB). Governance and delivery will be overseen by the RPIB alongside an industry-led Delivery Company. The design phase will run through 2026, with implementation spanning several years thereafter.

This is a pragmatic response to an infrastructure challenge that has consumed significant industry resource since 2017 without delivering a replacement system. The FPS, operated by Pay.UK, processes over 4 billion transactions per year. Any replacement must be at least as resilient, which is a high bar.

Open banking and the DUAA statutory instrument

The Forward Plan confirms that the Data (Use and Access) Act 2025 (DUAA) statutory instrument will be laid in Parliament in Q4 2026. This instrument will give the FCA powers to oversee the future open banking ecosystem, including regulating the Future Entity (the successor to the Open Banking Implementation Entity) and commercial payment initiation schemes. The DUAA also creates the legislative basis for smart data schemes beyond banking, with potential implications for telecoms and energy switching.

The FCA will publish a consultation on the open banking long-term regulatory framework interface rules in Q3 2026. This will define the technical and commercial terms on which third-party providers can access payment accounts, replacing the current CMA-mandated arrangements under the Retail Banking Market Investigation Order 2017. The FCA and PSR have also given clarity on pricing models for commercial variable recurring payments (cVRPs), a key building block for account-to-account payments competing with card-on-file subscriptions.

Stablecoins and the digital pound

The Plan treats stablecoins as part of mainstream payments infrastructure, not as a crypto-adjacent issue. The Bank of England’s consultation on systemic stablecoins closed in February 2026, with final rules and a supervisory framework expected by end of 2026. The FCA will finalise issuance rules for both systemic and non-systemic stablecoins, ahead of the broader cryptoasset regulatory regime going live in October 2027.

The Bank and FCA are also exploring whether regulated stablecoins can enable on-chain settlement within the Digital Securities Sandbox during H1 2026.

On the digital pound, the design phase continues through 2026. HM Treasury and the Bank of England are expected to publish a blueprint and a decision on whether to proceed during the year. The question is no longer whether a central bank digital currency is technically feasible, but whether it is needed given the development of regulated stablecoin alternatives.

What this means for payments firms

The Forward Plan gives the payments industry what it has lacked since the Garner Review: a sequenced timetable with named responsible bodies and dated milestones. That is welcome. But the timetable is ambitious and depends on several variables outside the regulators’ control, including Parliamentary time for the PSR consolidation legislation, the pace of the DUAA statutory instrument, and the capacity of the FCA to absorb the PSR’s functions while simultaneously conducting a wholesale review of payments law.

For payment institutions and e-money issuers, the immediate priorities are the FCA’s safeguarding supplementary regime (effective 7 May 2026), the payments law consultation (Q2 2026), and the open banking interface rules consultation (Q3 2026). Each of these will require board-level attention and, in the case of safeguarding, operational preparation now.

For investors in payments businesses, the Forward Plan provides a degree of regulatory certainty that has been absent. The direction of travel is clear: a single regulator, a modernised legislative framework, and regulated stablecoins as part of the payments landscape. The timeline is less certain.

The Forward Plan confirms that the UK is building a bespoke payments regulatory framework. Whether it delivers the growth and innovation the National Payments Vision promised will depend on execution. The timetable starts in earnest in Q2 2026.