Vixio’s Verdict: The New UK Payments Plan Points The Way, Not The Specifics

The long-awaited publication of the UK’s Payments Forward Plan underlines the scale of the relevant authorities’ ambitions and of the challenge they have set themselves and the industry in the pursuit of growth and increased competition.

Originally expected by the end of 2025, the strategy has faced delays, heightening anticipation among stakeholders. The plan is intended to set the direction of travel for the UK’s payments ecosystem over the next three years.

It aims to build on the strategy outlined in the government’s National Payments Vision, which set out the ambition of creating “a trusted, world-leading payments ecosystem delivered on next-generation technology, where consumers and businesses have a choice of payment methods to meet their needs.” 

For banks, payment firms, fintechs and new market entrants alike, the significance of the plan lies in the clarity it provides, even if there is a lack of detail in some areas. 

The UK payments sector has undergone substantial change in recent years, including the growth of open banking and real-time payments and the emergence of digital assets and new forms of financial infrastructure. 

Against this backdrop, industry participants have been waiting for a coherent framework that signals how policymakers intend to balance innovation, resilience and consumer protection.

What new insights does the Payments Forward Plan offer?

Three areas of the plan in particular offer a sense of the change the government and regulators are seeking to make: modernising the regulatory framework, innovating in retail payments and protecting users and the system.

1. Modernising the regulatory framework

Consolidation of the Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA) and Financial Ombudsman Service (FOS) reform

The plan does not set out detailed timelines for either of these initiatives. However, it indicates that a consultation response from HM Treasury is expected for both by the end of March 2026. 

The response should provide greater clarity on how regulatory streamlining may work in practice, though any actual implementation will be subject to legislative timelines.

This uncertainty is more consequential for the FOS reform, which aims to end the service’s role as a “quasi-regulator” through better alignment with the FCA. 

By contrast, aspects of FCA–PSR integration are already emerging at a functional level, including the movement of personnel between the two authorities.

Assimilated Payments Law

The assimilated payments law is intended to replace retained EU payments legislation with a more UK-centric framework focused on competitiveness and innovation. 

In practice, this means revisiting rules that firms have long viewed as burdensome or poorly calibrated, including aspects of strong customer authentication (SCA) and other outdated operational requirements that are more burdensome than effective in nature.

Many in the sector see the reform as a key opportunity to modernise the UK payments framework.

Although such a significant overhaul is not expected to happen quickly, the timeline remains vague. The plan suggests that the relevant Statutory Instrument could be laid at any point between 2027 and 2028, leaving considerable uncertainty over when proposals will move from consultation to legislation.

2. Innovating in retail payments

Retail payments infrastructure design and delivery programme and short-term enhancements to existing retail payments infrastructure

Progress on the future design of the UK’s retail payments infrastructure remains unclear. Although the plan points to a consultation in Spring 2026, the scope of that consultation is still unknown. 

In particular, there is little clarity on when the proposed Delivery Co will be established or what programmes it will initially undertake to deliver the UK’s next generation of retail payments infrastructure.

The plan is similarly imprecise on enhancements to the Faster Payments System and the Bacs Payment System. Although framed as “short-term enhancements”, the delivery of “innovation-focused functionality and continued operational resilience” is scheduled broadly from 2026 onwards and appears to run through to 2028. 

What those innovation-focused improvements will involve remains unclear, raising the question of whether such work should ultimately sit with Delivery Co, yet the uncertainty around its establishment leaves industry observers with few concrete signals.

Digital pound

The Bank of England and HM Treasury have been in the design phase for a digital pound since 2023, but momentum around the project has at times appeared uneven. 

The plan does, however, provide one notable update: a go/no-go decision is expected by the end of 2026, which could help reset the pace of the initiative.

Open banking

Open banking stands out as one of the areas with the clearest direction. The plan points to the relevant Statutory Instrument being laid in Q4 2026, with regulation expected in Q1 2027. 

Compared with other initiatives, this provides firms with a meaningful level of detail to start preparations.

Stablecoins

No surprises here; the plan largely confirms expectations. The FCA’s broader cryptoasset regime is already scheduled to go live by October 2027, following a series of consultations. 

In the near term, the industry should gain greater clarity in Q2 and Q3 this year on how the Bank and FCA intend to coordinate the dual regulatory framework for stablecoins.

3. Protecting users and the system

Authorised push payment (APP) fraud

The industry continues to operate without a single claims management system to support the reimbursement regime. 

Although regulators acknowledge the need for such a system, progress has been slow. Nearly a year and a half after the regime came into force, the plan states only that an approach will be “developed and implemented through 2026–2027”. 

The approach appears likely to be largely industry-led, given the regulator’s previous hesitance to mandate a system. At the latest, a unified system is expected by Q3 2027, when the BPS claims management system, currently handling more than 90 percent of claim volume, is due to wind down.

Home Office’s Fraud and Data Strategy

The industry has been anticipating the Home Office’s Fraud and Data strategies. The Fraud Strategy is expected imminently, with the Data Strategy to follow in Q3 2026.

Firms will be looking for clearer signals of government support, particularly in areas where industry consensus has been difficult to reach, as well as a stronger articulation of national priorities. 

However, its impact will only become clear once the details are published and it becomes possible to assess whether the proposals are genuinely new or largely formalise initiatives already underway.

Vixio’s verdict

The plan provides a welcome degree of clarity, but not necessarily the watershed moment that many had hoped for. 

In many respects, the regulators have allowed themselves some flexibility as they navigate what will be an especially busy period over the next few years. 

What the plan does demonstrate, however, is the scale of change UK authorities are committing to and their stated intent to pursue reform in support of growth and competition.

Whether it ultimately delivers on that ambition remains to be seen. In several areas, the detail is still thin, and the industry will be hoping regulators provide greater clarity sooner rather than later. 

This is particularly true for the future design of the UK’s retail payments infrastructure – an undertaking substantial enough on its own, let alone alongside the many other programmes now underway.

For firms, the ambiguity that remains even with the publication of the Payments Forward Plan should not lead to inaction. 

As the regulators navigate their own functional integration, firms must prioritise internal data hygiene and cross-functional governance, in anticipation of the size of change that lies ahead.

Over the coming three years, payments organisations waiting for the authorities to give them a detailed regulatory roadmap will find themselves overtaken by more agile competitors that take a lead from the National Payments Vision and the Payments Forward Plan. 

The clearer signalling in the plan is not only helpful in setting direction for firms, but also reflects a willingness by regulators to engage with industry, a direction of travel already evident in the composition of the Retail Payments Infrastructure Board, which brings together public authorities and industry voices. 

Rather than waiting for fully defined timelines, firms should treat the plan as an opportunity roadmap whose ambiguity spells out opportunity: identifying the areas where they want to engage regulators early and positioning themselves ahead of forthcoming change.