Financial Services: Regulation

Achieving growth with good jobs and higher living standards in all parts of the country is an central priority for this government, and it is essential that the UK’s capital framework supports this. HM Treasury is responsible for the overall regulatory framework, including through the legislation underpinning it, ensuring the authorities have clear responsibilities and objectives, with effective powers. This reflects the UK’s established FSMA model of regulation, under which Parliament and HM Treasury set the overall framework, while independent regulators are responsible for developing detailed firm-facing rules.

The Bank of England, including through the Financial Policy Committee (FPC), is responsible for the UK’s bank capital framework. The FPC has a primary objective to maintain financial stability and a secondary objective to support the Government’s economic policy, including growth. The Chancellor’s 2025 remit letter to the FPC sets out that the capital framework should strike an appropriate balance between resilience, growth and competitiveness over the medium to long term.

The FPC is currently undertaking a review of bank capital requirements to ensure that the banking system is appropriately capitalised to support sustainable growth over the long term, and taking into consideration the approach of international counterparts. The Committee set out initial findings alongside the December 2025 Financial Stability Report, including in a ‘Financial Stability in Focus’ publication.

This sets out the Committee’s view that the appropriate benchmark for the system-wide level of capital requirements could be lowered by 1 percentage point. The FPC has identified three further areas to assess as part of the review: leverage-based capital requirements, capital buffers, and overlaps between capital requirements. The Bank has since been undertaking structured industry engagement and will update on its next steps in the next Financial Stability Report.