The UK government has outlined a Financial Services Bill and a crackdown on late payments as part of the King's Speech, which unveiled over 35 bills and draft bills. The legislative programme forms part of what the government describes as a long-term effort to strengthen the economy and improve conditions for businesses and consumers nationwide.
The Financial Services Bill proposes to merge the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA), consolidating oversight of the payments sector within a single regulatory body. The Bill also includes reforms to the Financial Ombudsman Service, which handles disputes between consumers and financial firms.
Late payment enforcement
The King's Speech included measures to address late payments, a longstanding pressure point for small and medium-sized enterprises across the UK. Under the proposed legislation, larger companies that regularly fail to pay suppliers on time would face financial penalties, including fines for those that do not settle amounts owed to small businesses within 60 days.
The chief executive of Napier AI, Greg Watson, said the focus on late payments and financial services regulation represented an important step towards supporting economic stability and business growth. Watson noted that late payments created cash flow pressures and financial uncertainty for SMEs, while financial institutions simultaneously faced a more complex risk environment involving fraud, financial crime, and economic volatility.
Workforce and infrastructure implications
Sheila Flavell, chief operating officer of FDM Group, said the late payment crackdown signalled that the UK's payments infrastructure needed to modernise, but cautioned that businesses lacked the workforce to deliver the required transformation. She cited legacy system migration, real-time API banking, and the acceptance of new payment methods, including stablecoins, as key challenges requiring data engineers, developers, and compliance specialists.
Regulatory context
The proposed merger of the PSR into the FCA has been under discussion for some time, reflecting broader questions about the efficiency of having a dedicated payments regulator separate from the conduct regulator. Consolidating the two bodies could streamline supervisory processes and reduce duplication, though it also raises questions about whether payments-specific expertise and focus will be maintained within a larger regulatory organisation.
The late payment measures address a structural issue in UK business finance. Research has consistently shown that delayed payments from larger buyers create disproportionate cash flow difficulties for smaller suppliers, with knock-on effects on investment, hiring, and business survival. Legislative enforcement, rather than voluntary codes, represents a shift in the government's approach to tackling the issue.
The King's Speech, the second delivered under the current government, also covered measures spanning immigration, environment, health, housing, transport, crime, digital identity, road safety, and cybersecurity.
