Financial Legislation Changes Expected To Take Place In The UK

Financial Legislation Changes Expected To Take Place In The UK

Meta Description: The UK Parliament is expected to change financial legislation this year. Discover the possible legislations and how they’ll impact you.

Financial regulations change to match the dynamics of domestic and international trends. In the United Kingdom, regulators have rolled out changes for 2025 and beyond that will impact financial firms and investors. In this article, we’ll explore the key financial legislation and regulatory reforms expected in the UK.

Financial Regulations Expected in the UK in 2025

The UK’s financial services industry uses a comprehensive regulatory system that ensures market integrity and provides a safe environment for traders who explore financial markets through TradingView and other UK-compliant platforms. The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are the two key regulators, with various regulations and legislation implemented under their purview.

Operational Resilience Frameworks

Following directives from the PRA and FCA, UK financial services firms implemented the operational resilience framework in March 2025. The framework has four objectives:

1. Ensure the safety and soundness of business services in organisations
2. Ensure financial stability across the market
3. Minimise harm to consumers
4. Minimise or mitigate market disruption.

Built around three pillars (identify and prepare, respond and adapt, and recover and learn), the framework requires firms to define an impact tolerance for acceptable disruption, identify critical business services, and ensure services remain within the tolerances during disruption. The regulators set 31 March as the implementation deadline.

Basel III (Basel 3.1): Financial Stability

Basel 3.1 is the final set of the Basel 3 framework, an international banking reform that followed the 2008 global financial crisis. According to the PRA’s timeline, it will be implemented by 1 January 2025. The reforms will improve banks’ measurement of risk and ensure that operations between firms follow a standard that makes their capital ratios more comparable and consistent.

Basel 3.1 will also overhaul market and operational risk calculation, enhancing disclosure and reporting requirements. The ultimate goal of this reform is to ensure that banks can absorb losses, thereby reducing the risk of taxpayer-funded bailouts.

Sustainability Reforms

To reduce carbon emissions, the government will implement a regulatory framework for sustainable growth and energy transition. The government will decide on the ISSB sustainability standards (IFRS S1 and S2) and may require FCA-regulated companies to report under the UK Sustainability Reporting Standards (UK SRS).

The regulation may also involve providing environmental, social, and governance ratings and enhancing financial firms’ approaches to financial risks from climate change. This will improve transparency in the financial sector and support green investing.

Cryptocurrency Regulations

UK regulators currently recognise cryptocurrencies and digital assets as personal property. However, new legislation will bring further clarity to their status in 2025. The FCA is consulting industry leaders and has released a draft legislation for regulating crypto assets. The legislation is key for the UK market for several reasons, including catching up with the European Union, which has the Markets in Crypto-Assets (MiCA) regulation.

The new framework will prioritise consumer protection, requiring domestic and international firms to register with the FCA, comply with anti-money laundering (AML) rules, and market integrity guidelines. It will also classify cryptocurrencies as specified investments under the Financial Services and Markets Act (FSMA) 2000. The legislation will be implemented in phases to cover decentralised finance (DeFi) on a case-by-case basis.

UK Finance Act 2025: Taxation

The Finance Act 2025 received Royal Assent on 20 March 2025 and brought several taxation reforms. These key changes include an extension and increase to the Energy Profits Levy on oil and gas companies, the abolition of the non-UK domiciled tax regime, and VAT exemption on private school fees. There are also changes to Capital Gains Tax (CGT) and Stamp Duty Land Tax rates.

Outside the finance sector, UK regulators may also consider increased controls for generative artificial intelligence. The widespread adoption of AI is a significant trend that could impact financial markets differently.

How Reforms Will Impact Businesses

The financial reforms will impact UK businesses in varying degrees. Here are the three most important ways reforms will impact financial services firms.

Innovation and Expansion

An increased focus on consumer protection creates a pro-growth environment and improves businesses’ access to finance. This will drive innovation and expansion in the finance sector and other industries. UK firms will also expand their service exports and attract international investments. Upgrades to core infrastructure will improve competitiveness and are a core target of the government to revive the financial services sector.

More Costs for Companies

Complex regulations may burden businesses and end consumers with more costs. Compliance with government regulations may increase operational overhead as firms face heightened scrutiny on fraud prevention, AML, and sanctions. Although the integration of the Payment Systems Regulator (PSR) into the FCA will strengthen oversight, leading to more frequent and detailed checks.

Changes to Financial Planning

Banks and other financial institutions, especially those involved in lending, trading, and investments, must adjust their capital requirements to fit Basel 3.1 requirements. This change in financial planning may affect the operational structure. Companies will need to implement strategic risk management and seize opportunities as they arise.

UK Financial Sector Outlook

The UK’s financial sector needs stimulation, which the reforms could provide in 2025 and beyond. From sustainability reforms to cryptoasset regulation, investors can find emerging trends that may shape UK markets in the coming months. Growth opportunities in the equities and bond markets are expected in the long term following the implementation of the new legislation.