Legislative status: based on the Bill as it stands after Grand Committee. It is not law and it can still change.
The Financial Services and Markets Bill would create a new “provisional licence”. Advisers are already telling payment firm owners this will make UK payment licences easier to get, and therefore worth less. Read the clause. The provisional licence is a temporary permission under Part 4A of FSMA. Payment services do not run on Part 4A. Nobody can use one to become an SPI, an API or an EMI.
The provisional licence cannot get anyone into UK payments. Not an SPI. Not an API. Not an EMI.
This matters because of what a buyer pays for. A buyer pays a premium for an authorised or registered payment firm because getting one from scratch is slow, hard, and not guaranteed. If that changed, the premium would fall. Over the next few months you will hear that it is about to change. It is not, and the Bill says so in writing.
Here is the provision that decides it. Clause 29 would insert a new section 55AA into the Financial Services and Markets Act 2000. The Bill calls it a temporary Part 4A permission. A provisional licence is a Part 4A permission with an expiry date on it.
Payment services are not a Part 4A activity.
An API is authorised under the Payment Services Regulations 2017. An SPI is registered under the same regulations. An authorised EMI is authorised under the Electronic Money Regulations 2011, and a small EMI is registered under those. None of those four statuses is a Part 4A permission. A temporary Part 4A permission cannot stand in for any of them.
One thing this does not mean
Be precise here, because a buyer will test it.
Plenty of payment firms do hold a Part 4A permission. A firm can be an authorised payment institution and an FCA-authorised person at the same time, usually for consumer credit or another FSMA activity. The FCA says so in its own perimeter guidance. That is normal and it is allowed.
It does not help anyone here. A temporary Part 4A permission cannot authorise payment services, because providing payment services is not a FSMA regulated activity at all. It sits in a separate statute.
E-money deserves a second look, because it is the one place this argument could have broken. Issuing electronic money is a FSMA regulated activity. But article 9B of the Regulated Activities Order limits that activity to qualifying credit institutions, credit unions and municipal banks. A new entrant cannot take the Part 4A route into e-money. It has to go through the Electronic Money Regulations 2011, and the provisional regime does not touch them.
What the Bill would actually do
Three things are being discussed.
It abolishes the Payment Systems Regulator and moves its work to the FCA. The PSR confirmed this in its annual report on 9 July 2026.
It creates the provisional licence. A firm could hold a temporary permission for a fixed period. Section 55AA sets that at 18 months, or another period set by HM Treasury, capped at two years. The firm operates under close supervision while it works towards full authorisation. It is not open to everyone. Under section 55AA(3) the FCA has to specify by rule which regulated activities are eligible, and the Explanatory Notes are clear that not every activity or firm type will qualify.
It shortens the FCA’s deadlines for deciding applications. Paragraph 162 of the Explanatory Notes lists them. A complete new firm application would drop from six months to four. An incomplete one from twelve months to ten. Senior manager applications from three months to two.
Every item on that list is an application under FSMA 2000.
The three-month clock nobody is talking about
Your application deadline was never six months. It was three.
Regulation 9(1) of the Payment Services Regulations 2017 gives the FCA three months to decide a complete API authorisation application. Regulation 15 applies that same clock to SPI registration. Regulation 9 of the Electronic Money Regulations 2011 does the same for an authorised EMI, and regulation 15 carries it across to small EMI registration.
Section 55V of FSMA gives the regulator six months for a complete FSMA application. That is the clock clause 21 would cut to four.
So the Bill would take a six-month clock down to four. The payment clock is already three. It is not in the Bill. It does not move.
The reform speeds up a clock your firm was never on, and opens a route your firm cannot enter.
Change of control does not move either
The deal clock is unchanged. This is the one that decides when a sale completes.
When someone buys control of an SPI or API, the FCA must approve them. Schedule 6, paragraph 5 of the Payment Services Regulations 2017 applies Part 12 of FSMA to payment institutions. Schedule 3, paragraph 4 of the Electronic Money Regulations 2011 does the same for e-money institutions.
Section 189 of FSMA gives the FCA 60 working days to assess the buyer. The clock starts when the FCA acknowledges receipt of the notice.
Section 190 lets the FCA stop that clock once, on its first request for more information. The pause is capped at 20 working days. It is capped at 30 working days where the buyer is situated or regulated outside the UK or Gibraltar. If your buyer pool is mostly overseas, 30 is your number, not 20.
Search the Bill’s Explanatory Notes for “change in control” and you get nothing. The only touch on Part 12 is a limited clarification to section 187, about the conditions the FCA can attach to an approval.
The FCA is fast at this, and the number is public. Its operating service metrics for 2025/26 show 99.9% of change in control decisions made inside the statutory period.
Two warnings on how to use that figure. The 60 working days start when the FCA acknowledges the notice, not when you sign. And they are not the whole timetable. You still have to prepare the filing, answer the FCA’s questions, satisfy the conditions in the contract, and hand the business over. Sixty working days sits at the centre of a deal timetable. It is not all of it.
What the Bill does change for you
One regulator instead of two. That is the honest summary.
The PSR moves into the FCA. For an SPI, API or EMI this is mostly a change of letterhead. Authorisation and registration stay with the FCA. Safeguarding stays where it is. The Payment Services Regulations 2017 stay in force.
It removes a little friction from a transaction. It does not touch price.
What this does to price
If you are selling. Your licence is not about to be devalued by this Bill. Do not accept a lower offer on the argument that provisional licences are coming and will make your permission common. Ask the buyer one question. Which statute would give a provisional licence holder the right to provide payment services? There is no answer. The Payment Services Regulations are untouched.
If you are buying. Do not reorder your pipeline on the assumption that a provisional licence is a cheaper route than an acquisition. For payment services it is not a route at all. And do not model a shorter change-of-control period. It is still 60 working days, plus the pause.
The FCA’s own throughput is worth reading. In 2025/26 the FCA determined 93.5% of payment services authorisation applications inside the deadline. Two of 31 cases missed. For e-money, 95.7%, with two of 46 missing.
Read the denominator, not the percentage. Thirty-one. That is how many API authorisation applications the FCA decided in a year. SPI applications are registrations and sit on a separate line, so they are not inside that number.
Be careful what you take from it. Those figures show the FCA usually hits its deadline. They do not prove that only 31 firms wanted a licence, and they do not on their own prove scarcity. What they do show is that the front end of UK regulated payments moves in small volumes, and that a statutory deadline was never the thing slowing it down. Across the mandates Vertice Fintech has brokered, that is why buyers acquire instead of applying, and why a clean authorised firm holds its price. That is our read of the market, not a finding of the FCA.
Three questions to test any claim about this Bill
Use these on any adviser, buyer or newsletter that tells you the Bill changes your position.
- Which statute would give the buyer what they need? Payment services sit in the Payment Services Regulations 2017. E-money sits in the Electronic Money Regulations 2011. The provisional licence sits in FSMA Part 4A. Those are three different doors.
- Which clock does an application run on? Three months for a complete API, SPI or EMI application. Six months under section 55V of FSMA, which the Bill would cut to four. Payment firms are on the three.
- Which clock does the deal run on? Section 189 of FSMA. Sixty working days from acknowledgement, plus one pause of up to 20 working days, or 30 for an overseas buyer. The Bill does not touch it.
If they cannot answer all three, they are reading a press release, not the Bill.
Where this could still change
This is the position as drafted, on 13 July 2026. Three things could move it, and an honest reading has to say so.
First, the Bill is not law. Grand Committee finished on 8 July 2026. Report stage comes next, then the Commons. Clauses get amended at Report stage. Nothing in the current text extends provisional licences to payment services. The text is not final.
Second, HM Treasury has taken broad powers. New section 55Z5 lets it make regulations about applying for, giving, cancelling and varying a temporary permission. Paragraph 163 of the Explanatory Notes gives it power to change the application deadlines by secondary legislation.
Third, the Payment Services Regulations 2017 will not last forever. The FCA is already building for what it calls the post-repeal regime, which replaces the safeguarding rules in the PSRs and EMRs with a CASS-style regime. That is set out in the FCA’s policy statement PS25/12. A later government could bring payment services inside a FSMA-style framework and extend the provisional licence to it.
So “not now” is not “not ever”. It is a real risk on a horizon of years, not months. It is a reason to plan an exit properly. It is not a reason to accept a lower price this year for a reform that does not exist.
Who this is not for
This is not for firms applying for a new authorisation. Vertice Fintech does not run applications and does not sell compliance work.
It is also not for FSMA firms. If your business needs a Part 4A permission for an activity the FCA later makes eligible, the provisional licence is real and it may apply to you. The point of this article is that payment services and e-money issuance sit under different statutes, with different clocks, and the Bill leaves both alone.
The next deal conversation
Take one action. When a buyer, a broker or an adviser uses this Bill as a reason to pay you less, ask them to name the statute that would let a provisional licence holder provide payment services.
There is not one. Clause 29 says Part 4A. Payment services do not live there.
Frequently asked questions
Does the provisional licence regime apply to payment institutions?
No. The provisional licence in the Financial Services and Markets Bill is a temporary Part 4A permission under FSMA 2000. Payment institutions are authorised or registered under the Payment Services Regulations 2017, and e-money institutions under the Electronic Money Regulations 2011. A temporary Part 4A permission cannot stand in for either.
What is a provisional licence under the Financial Services and Markets Bill?
It is a temporary FCA permission for a fixed period, letting an eligible new firm carry on limited regulated activities under close supervision while it works towards full authorisation. Section 55AA sets the period at 18 months, or another period set by HM Treasury, capped at two years. The FCA decides by rule which activities qualify.
Is a small payment institution authorised or registered?
Registered. An SPI is registered under regulation 14 of the Payment Services Regulations 2017. An authorised payment institution is authorised under regulation 6. The difference matters in a sale, because the register entry, the permissions and the conditions attached to each are not the same.
Would the Bill shorten the time the FCA takes to authorise an SPI, API or EMI?
No. The Bill would shorten the FSMA deadline for a complete new firm application from six months to four. Payment and e-money applications are decided under regulation 9 of the Payment Services Regulations 2017 and regulation 9 of the Electronic Money Regulations 2011, which already set three months for a complete application. The Bill does not amend either.
How long does the FCA have to decide a payment institution application?
Three months from the date it receives a complete application. That covers API authorisation under regulation 9 of the PSRs 2017, SPI registration through regulation 15, and EMI applications under the equivalent regulations in the EMRs 2011. If the application is incomplete, the FCA has up to twelve months. In practice the elapsed time from starting the work to holding a licence runs far longer, which is why most buyers acquire an existing firm.
Does the Bill change FCA change of control when buying a payment institution?
No. Change of control runs through Part 12 of FSMA, applied to payment institutions by Schedule 6, paragraph 5 of the PSRs 2017 and to e-money institutions by Schedule 3, paragraph 4 of the EMRs 2011. Section 189 gives the FCA 60 working days from acknowledging the notice. Section 190 allows one pause, up to 20 working days, or 30 where the buyer is outside the UK or Gibraltar. The Bill leaves all of it alone.
What does abolishing the Payment Systems Regulator mean for an SPI, API or EMI?
It means one regulator instead of two. The PSR’s functions move to the FCA. Authorisation, registration, supervision and safeguarding for payment firms already sat with the FCA and stay there. The Payment Services Regulations 2017 remain in force. For most payment firms the practical effect on a transaction is small.
Would the Bill make a UK payment institution licence less valuable?
No. The Bill does not widen the route into UK payments. It does not shorten the payment or e-money application clock, and it does not create a temporary permission that covers payment services. The reasons a buyer pays for an authorised or registered firm are unchanged by it.
Should a seller bring a sale forward because of this Bill?
Not because of this Bill. Nothing in it reduces the value of a payment licence. Bring a sale forward for real reasons: a clean regulatory record, a live banking relationship, a buyer with money now. Not for a reform that does not reach you.
Where is the Bill now, and could this change?
It had its first reading in the House of Lords on 19 May 2026. Grand Committee finished on 8 July 2026. Report stage comes next, then the Commons. Clauses can be amended at Report stage, and HM Treasury holds broad powers to make regulations later. The position set out here is the Bill as drafted on 13 July 2026.
