The UK government has used Fintech Week 2026 as a platform to unveil a comprehensive package of reforms designed to modernise the country's payment services regulation and reinforce its position as a global hub for financial technology. Announced by HM Treasury, the measures include a formal consultation inviting feedback from the payments sector, additional funding for the Centre for Finance, Innovation and Technology (CFIT), and a series of structural and regulatory changes aimed at keeping pace with rapid technological advancements.
Lucy Rigby, Economic Secretary to the Treasury, emphasised the strategic importance of the fintech sector, describing it as a 'true British success story'. 'We are backing the industry to maintain its competitive edge and go even further and faster in driving growth,' she said. Rigby's comments came as she attended events in London during Fintech Week, a week-long series of conferences, networking sessions and policy discussions that bring together start-ups, investors, regulators and policymakers.
Key Announcements and Regulatory Changes
The centrepiece of the government's announcement is a commitment to bring the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA). This merger aims to create a single, streamlined regulatory body for payment systems and financial services, reducing complexity for firms and ensuring consistent oversight across the payments ecosystem. The move has been widely anticipated and is intended to eliminate duplication of effort between the two regulators.
Alongside the structural change, the government outlined a single framework for both traditional and tokenised payments. This unified approach recognises the growing importance of digital assets and blockchain-based settlement systems in wholesale and retail markets. By setting clear rules for tokenised payments, the UK hopes to attract more fintech companies experimenting with distributed ledger technology and stablecoins.
Another significant element of the package is the guidance on how payment service regulation should respond to the use of artificial intelligence (AI) agents. As AI-driven systems increasingly conduct purchases on behalf of consumers and businesses, regulators need to clarify liability, security requirements and consumer protection rules. The government's guidelines will help firms deploy AI agents with confidence, knowing the regulatory framework underpins their operations.
Stablecoin Regulation and Administrative Burdens
The government also announced plans to regulate the use of stablecoins – cryptocurrencies designed to maintain a stable value by being pegged to a fiat currency or other asset. At the same time, it promised to cut administrative burdens for companies that want to offer stablecoin payment services. This dual approach is intended to foster innovation while ensuring that consumer protection and financial stability are not compromised. The UK has been keen to establish itself as a leader in crypto asset regulation, having previously introduced a financial services regime for crypto assets.
New Funding and Leadership Appointments
As part of the fintech growth strategy, the Treasury committed an additional £1 million to fund the Centre for Finance, Innovation and Technology (CFIT) from April 2026. CFIT, launched in 2024, is a public-private partnership that facilitates collaboration across the fintech sector, from start-ups to established banks. The extra funding will allow CFIT to continue its work on data sharing, open banking standards and other initiatives that help fintechs scale.
In a separate move, the government appointed Chris Woolard CBE as the Wholesale Digital Market Champion. Woolard, a former interim chief executive of the FCA and a seasoned regulator, will be tasked with driving the development of tokenised wholesale financial markets. His role is to foster dialogue between the private and public sectors, ensuring that the UK can build a world-leading ecosystem for digital securities and other tokenised assets.
'The UK offers a thriving startup ecosystem, global banks and insurers, and leading universities,' Woolard said. 'Our regulators also keep up with innovation, letting firms test, learn and scale responsibly.' He called for open collaboration to create a tokenised wholesale financial markets ecosystem that can compete with hubs like Singapore and New York.
Context: The State of UK Fintech
The announcements come at a critical time for the UK's fintech sector. According to industry data, more than 3,000 fintech firms operate in the UK, employing tens of thousands of people. The country is second only to the United States in global fintech investment rankings. However, investment levels fell in 2025 to their lowest since 2020, raising concerns that the UK might be losing momentum to other jurisdictions.
Revolut, the UK-headquartered digital bank, has bucked the trend. The company reported a £23 billion value jump last year, bringing its valuation to £57 billion. Chris Skinner, CEO of The Finanser, described Revolut as Britain's 'leading technology company'. Nonetheless, the overall decline in fintech investment highlights the need for government action to maintain the sector's competitive edge.
Earlier this year, the FCA outlined its open finance plan for 2030, setting a roadmap for giving consumers and businesses more control over their financial data. That initiative, combined with the latest package, signals the government's determination to create a regulatory environment that encourages innovation while protecting consumers.
Industry Reactions and Next Steps
Industry leaders have broadly welcomed the reforms. Philip Belamant, co-founder and CEO of Zilch, a buy now, pay later fintech, said: 'The UK has a real opportunity to lead globally in enabling agentic finance, helping consumers benefit from smarter, more efficient ways to manage their money.' The Treasury's consultation on payment services regulation is expected to run for several weeks, with the aim of finalising new rules by the end of 2026.
The integration of the PSR into the FCA will require primary legislation, but the government has indicated it will move quickly. The stablecoin regulation will be introduced via secondary legislation, allowing for faster implementation. Meanwhile, the new guidelines on AI agents are expected to be published in draft form later this year for further industry feedback.
As Fintech Week continues, the focus will shift to implementation. The government's messaging is clear: it wants the UK to remain the premier destination for fintech firms looking to start, scale and succeed. By modernising payment regulation, embracing tokenisation, and backing innovation with both funding and leadership, the Treasury hopes to ensure that the British fintech story continues to thrive in the years ahead.
Source: ComputerWeekly.com News