HM Treasury response to regulatory cross-cutting reforms consultation

On 12 May 2026, His Majesty’s Treasury (HMT) published its formal consultation response to its July 2025 consultation paper on cross-cutting reforms to the financial services regulatory framework. The response confirms the legislative changes that HMT intends to make to the framework governing the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), marking a significant milestone in the government's broader Financial Services Growth and Competitiveness Strategy.

In July 2025, as part of the Leeds reforms package (see our client briefing here) the Chancellor of the Exchequer, Rachel Reeves, launched the Financial Services Growth and Competitiveness Strategy and announced a series of targeted interventions to the UK's domestic regulatory framework. Between July and September 2025, HMT consulted on proposals to:

• set new, shorter deadlines for determining priority regulatory applications;
• require the regulators to set out their strategic approach to regulation and supervision; and
• remove duplicative processes to enable the regulators to be more agile and responsive.

The consultation response now confirms the legislative changes that HMT will pursue. These reforms represent a meaningful shift in the government's approach to financial services regulation, with a clear direction of travel towards a framework that is faster, more strategic, and less burdened by procedural duplication.

Delivery requires primary legislation, which the government will bring forward when parliamentary time allows. This article sets out the key confirmed reforms. Firms should take note of the changes and engage with the regulators' evolving strategies as they are published.

1. Shorter statutory deadlines for authorisations, variations of permission and Senior Manager Approvals

The consultation proposed shortening the statutory deadlines for the applications that have the greatest impact on firms' ability to start up and grow in the UK: new firm authorisations, variations of permissions, and senior manager approvals. The vast majority of respondents supported these proposals, and the confirmed changes are as follows:

New firm authorisations:

• Complete applications: deadline shortened from six months to four months.
• Incomplete applications: deadline shortened from twelve months to ten months.

Variations of permission:

• Complete applications: deadline shortened from six months to four months.
• Incomplete applications: deadline shortened from twelve months to ten months.

Senior manager approvals:

• Deadline shortened from three months to two months.

2. Additional shortened statutory deadlines: financial promotion approvals, SM&CR variations and regulatory requirements

Through the consultation and policy development process, the government identified several other related statutory application deadlines that it considers appropriate to shorten. The additional confirmed changes are:

Financial promotion approvals:

• Complete applications: deadline shortened from six months to four months.
• Incomplete applications: deadline shortened from twelve months to ten months.

SM&CR variations:

• Deadline shortened from three months to two months.

Applications to vary requirements imposed by the regulators:

• Complete applications: deadline shortened from six months to four months.
• Incomplete applications: deadline shortened from twelve months to ten months.

Power to amend deadlines in future

The government is committed to keeping these statutory deadlines under review and will take a power enabling it to amend them through secondary legislation in future — for example, to shorten certain deadlines further if the regulators are able to process applications more quickly, including through greater use of technology.

Regulators already reporting against new targets

The regulators have agreed to report against stretching new performance targets for critical applications, ahead of legislative change. The FCA published its first performance metrics against these new targets in February 2026 and the PRA in March 2026.

3. Long-term strategies for the FCA and PRA

The government will legislate to require the FCA and PRA to produce long-term strategies at least once every five years, setting out their strategic priorities with respect to their objectives and approach to supervision.

In preparing their strategies, the regulators will be required to have regard to:

• the Financial Services and Markets Act 2000 (FSMA 2000) regulatory principles;
• Treasury recommendations;
• the principles in the Legislative and Regulatory Reform Act 2006 (LRRA 2006) and the Regulators' Code; and
• their general duties — including, for the FCA, its competition duty and its approach to minimising financial crime.

The FCA will also be given an additional "have regard" consideration related to payment systems, reflecting its new responsibilities following the consolidation of the Payment Systems Regulator into the FCA.

To ensure the strategies remain current and relevant, the regulators will be required to:

• publish a new long-term strategy at least once every five years;
• update or publish a new strategy as necessary if the Treasury issues further recommendations in a new remit letter, or notify HMT with an explanation if they conclude this is not required; and
• provide an update in their annual reports setting out how they are delivering against their long-term strategies.

The FCA published a long-term strategy in 2025, covering the period to 2030, see our article on that here. The government has welcomed this and will work with the FCA to ensure that it is able to meet its obligations under the new legislative requirements without needing to issue a new strategy.

4. Streamlining the "have regards" framework

The government will remove the requirement for the regulators to consider each "have regard" when carrying out their general functions. Instead, the regulators will be required to have regard to the regulatory principles and Treasury recommendations when producing their long-term strategies. They will also be required to set out the extent to which they have implemented their strategies in their annual reports.

The principles in the LRRA 2006 and the Regulators' Code will be treated in the same way - considered in the development of long-term strategies, but not required to be applied to day-to-day regulatory functions.

5. Removing prescriptive procedural and administrative requirements

The government has concluded that certain procedural requirements impose burdens on the regulators that are disproportionate to their value to stakeholders. It will legislate to remove a small but impactful set of prescriptive reporting and other procedural obligations, including:

• removing a range of annual reporting requirements - for example, the regulators' reporting on their consideration of the FSMA 2000 regulatory principles, and the FCA's reporting on its competition duty and economic crime work, as these matters will instead be addressed in long-term strategies;
• removing obligations to consult on guidance and minor rule changes;
• removing the requirement for regulators to give guidance on advancing their objectives;
• removing or amending a range of minor procedural statutory obligations;
• making changes to governance procedures for Bank of England committees and the FCA board to provide greater operational flexibility; and
• removing requirements to publish certain bank resolution information in newspapers.

These reforms will not prevent the regulators from undertaking any of the above where they consider it beneficial to do so, but will provide greater flexibility to focus resources on strategic priorities.

6. Provisional licences

The consultation also provided an update on the government's plans to work with the FCA to develop a provisional licences regime for early-stage financial services firms seeking FCA authorisation. In December 2025, the government published a policy update setting out further details of how it intends to deliver this.

Next steps

Taken together, these reforms are designed to encourage growth and competitiveness by requiring the FCA and PRA to determine applications more quickly; requiring the regulators to operate more strategically; and reducing unnecessary procedural burdens to facilitate this.

We will continue to monitor the progress of the primary legislation required to implement these changes and will publish further updates as the position develops. In the meantime, should you have any questions about the implications of these reforms for your business, please do not hesitate to contact your usual contact at the firm.