The referral mechanism in the Financial Services and Markets Bill is designed to ensure consistent application of the standards set by the Financial Conduct Authority (FCA) in Financial Ombudsman Service (FOS) determinations. It will support the efficient resolution of complex complaints where the FOS considers there is ambiguity in a relevant FCA rule and that is relevant to its determination of a complaint, while preserving the FOS’s ability to resolve the vast majority of complaints without making a referral.

The exact number of referrals will depend on the issues which arise in FOS casework and the extent to which it considers these raise ambiguity or wider implications for financial services firms and consumers. The Government expects that there may be relatively more referrals initially, which will then reduce as clarifications are provided by the FCA – with only a very small proportion of cases being referred even in the early stages.

To prepare for the changes, the FCA and the FOS are operating a trial version of the referral mechanism, which is limited to issues with wider implications. Since July 2025, when they updated their Memorandum of Understanding to agree the trial version, the FOS has made three referrals to the FCA. While the Government would expect more referrals once the new framework covering ambiguity is in place, this supports an assessment that overall volumes will be manageable.

The Bill allows HM Treasury to specify further conditions that must be met for the FOS to make a referral through a statutory instrument. This will allow the Government to address any potential issues that arise during implementation, including making sure that the volume of referrals remains reasonable and supports efficient resolution of cases.

The Bill provides for HM Treasury to set in regulations a timeframe for the FCA to respond to a referral to avoid unnecessary delays. The Government’s consultation response, published on 16 March 2026, confirms its intention is to set this timeframe at 30 days in most cases.

The FCA is operationally independent of government, and as such the government has not made an assessment of its use of artificial intelligence (AI). The FCA is accountable to the government and Parliament for the exercise of its functions.

The government is committed to the safe and responsible adoption of AI across the economy, and welcomes regulators considering how they can use AI in a way that improves efficiency, while keeping human judgement central to decision-making.

The Financial Conduct Authority (FCA) provided the link to their online press statement on 18 June, confirming that their investigation had concluded and no further action would be taken. The Department has had no other correspondence with the FCA on this matter, nor have any meetings taken place with the FCA.

The Government consulted extensively on reform of the anti-money laundering and counter-terrorist financing (AML/CTF) supervision regime, including with representatives of the legal sector from across the UK. The Financial Conduct Authority (FCA) is well placed to undertake this role, with extensive existing AML/CTF expertise and oversight of legal and accountancy sector supervision through its Office for Professional Body Anti-Money Laundering Supervision (OPBAS).

The Government will ensure successful implementation by providing funding from the Economic Crime (Anti Money Laundering) Levy (ECL) and is working closely with the FCA to ensure it further develops the capability and sector-specific expertise required. The FCA will consult on its future fee arrangements as implementation progresses.

The Government consulted extensively on reform of the anti-money laundering and counter-terrorist financing (AML/CTF) supervision regime, including with representatives of the legal sector from across the UK. The Financial Conduct Authority (FCA) is well placed to undertake this role, with extensive existing AML/CTF expertise and oversight of legal and accountancy sector supervision through its Office for Professional Body Anti-Money Laundering Supervision (OPBAS).

The Government will ensure successful implementation by providing funding from the Economic Crime (Anti Money Laundering) Levy (ECL) and is working closely with the FCA to ensure it further develops the capability and sector-specific expertise required. The FCA will consult on its future fee arrangements as implementation progresses.

The Government consulted extensively on reform of the anti-money laundering and counter-terrorist financing (AML/CTF) supervision regime, including with representatives of the legal sector from across the UK. The Financial Conduct Authority (FCA) is well placed to undertake this role, with extensive existing AML/CTF expertise and oversight of legal and accountancy sector supervision through its Office for Professional Body Anti-Money Laundering Supervision (OPBAS).

The Government will ensure successful implementation by providing funding from the Economic Crime (Anti Money Laundering) Levy (ECL) and is working closely with the FCA to ensure it further develops the capability and sector-specific expertise required. The FCA will consult on its future fee arrangements as implementation progresses.

The Financial Services and Markets Bill simplifies how payment systems are regulated by abolishing the Payment Systems Regulator (PSR) and transferring its responsibilities to the Financial Conduct Authority (FCA). In doing so, it gives the FCA objectives and powers generally equivalent to those currently held by the PSR, including the ability to make rules or give directions for the purpose of regulating payment system fees and charges. This ensures there is continuity in regulation and that the FCA can carry out its new responsibilities effectively.

The FCA’s power to regulate payment system fees and charges would be subject to challenge on judicial review principles. A challenge to equivalent powers held by the PSR is determined by judicial review principles, and the Bill maintains the same test when those functions transfer to the FCA. This is also consistent with the existing approach taken elsewhere in the Financial Services and Markets Act 2000.

The Government recognises that regulators’ powers should be subject to appropriate safeguards. Powers to regulate payment system fees and charges must advance payment systems objectives. The Bill ensures before exercising those powers, the FCA must comply with procedural requirements, such as undertaking a consultation, which help to ensure decisions are transparent, evidence-based and proportionate.

I refer the Rt honourable Member to the answers given to his questions in PQ UIN 14370 and UIN 14371 on 30 June 2026.

I refer the Rt honourable Member to the answers given to his questions in PQ UIN 14370 and UIN 14371 on 30 June 2026.

I refer the Rt honourable Member to the answers given to his questions in PQ UIN 14370 and UIN 14371 on 30 June 2026.

I refer the Rt honourable Member to the answers given to his questions in PQ UIN 14370 and UIN 14371 on 30 June 2026.

The Government is committed to maintaining the UK’s position as a leading global financial centre, supported by a competitive, innovative and well-regulated payments ecosystem that delivers good outcomes for consumers, businesses and the wider economy.

The Financial Services and Markets Bill simplifies how payment systems are regulated by abolishing the Payment Systems Regulator and transferring its functions to the Financial Conduct Authority. The Bill gives the FCA objectives and powers that are equivalent to those currently held by the PSR, ensuring there is continuity in regulation and that the FCA can carry out its new responsibilities effectively.

The price control provision is not an expansion of regulatory powers. It clarifies and replicates powers already exercisable by the PSR, so the FCA has the same tools where intervention is justified to protect service-users and support effective competition.

At the same time, the Government recognises that regulators must act proportionately and that their powers should be subject to appropriate safeguards. The Bill therefore strengthens the framework by requiring the FCA to consult before exercising this power, a safeguard that is not always required under the current regime. This will help ensure decisions are transparent, evidence-based and proportionate.

The Government is committed to maintaining the UK’s position as a leading global financial centre, supported by a competitive, innovative and well-regulated payments ecosystem that delivers good outcomes for consumers, businesses and the wider economy.

The Financial Services and Markets Bill simplifies how payment systems are regulated by abolishing the Payment Systems Regulator and transferring its functions to the Financial Conduct Authority. The Bill gives the FCA objectives and powers that are equivalent to those currently held by the PSR, ensuring there is continuity in regulation and that the FCA can carry out its new responsibilities effectively.

The price control provision is not an expansion of regulatory powers. It clarifies and replicates powers already exercisable by the PSR, so the FCA has the same tools where intervention is justified to protect service-users and support effective competition.

At the same time, the Government recognises that regulators must act proportionately and that their powers should be subject to appropriate safeguards. The Bill therefore strengthens the framework by requiring the FCA to consult before exercising this power, a safeguard that is not always required under the current regime. This will help ensure decisions are transparent, evidence-based and proportionate.

The government is consulting on proposals to require payment of VAT and PAYE return liabilities by Direct Debit.

No decisions have been taken on the design of any future compliance or enforcement framework. The consultation seeks views on a range of issues, including possible incentives and sanctions to encourage compliance.

The consultation also considers whether exemptions or alternative arrangements may be required for particular taxpayers, and any practical barriers to using Direct Debit. This includes seeking evidence on circumstances where businesses may face challenges in making payments by Direct Debit and welcomes responses from all interested parties, including charities, representative bodies and other organisations, including the financial sector.

The consultation is intended to inform the detailed design of any future policy and implementation framework. As part of this process, the government is seeking evidence on operational impacts, implementation costs and potential exceptions, and stakeholders are encouraged to provide relevant information through the consultation. No final decisions have been taken, and the government will consider consultation responses before determining next steps.