The financial services legislation is designed to deliver the Chancellor’s Leeds Reforms, seeking to boost a sector that has seen slow real-term growth since 2010 despite accounting for 8% of UK output and 1.1 million jobs.

The Bill intends to make the UK more globally competitive by consolidating the regulatory framework, which includes merging the Payment Systems Regulator into the Financial Conduct Authority (FCA) to reduce fragmentation. It also proposes a 50% reduction in the administrative burden of the Senior Managers and Certification Regime (SMCR) to allow leaders to focus on growth.

Gail Boag, CEO of ICAS, said: “The UK’s regulatory system needs to be modernised to ensure it is clear, trusted and predictable, and backed by regulators that command confidence. Getting this reform right is essential to maintain the UK’s position as a global financial centre and support long‑term, sustainable economic growth.”

Ms Boag noted that while the UK government must pursue growth, regulation should not be viewed as its enemy, as purposeful design provides the investor confidence that drives the economy.

“Good regulation is there to protect the consumer, and also investors, and we should be wary of reform at the cost of accountability and clarity,” she added.

To further support local finance, the Bill updates the ring-fencing regime and improves membership rules for credit unions, aiming to double the size of the mutual and co-operative sector.

Susan Love, ACCA Scotland’s engagement lead, emphasised the importance of the UK and Scottish governments pulling in the same direction to maximise these efforts, particularly as “confidence in UK SMEs is at a near record low”.

Simultaneously, the Small Business Protections (Late Payments) Bill will introduce the strongest legal framework in the G7 to address a crisis that costs the UK economy £11 billion annually.

Late payments currently lead to 38 business closures every day, a figure that totals 14,000 firms a year. The new laws will impose a maximum payment term of 60 days and mandate interest at 8% above the Bank of England base rate for late settlements.

The Small Business Commissioner will also receive new powers to investigate and fine persistent offenders.

Colin Borland, Scotland director of the FSB, welcomed the crackdown on big businesses using small suppliers as a “free overdraft”, noting that 62% of Scottish small firms have experienced late payments in the last three months.

These reforms aim to recover more than the £26bn currently owed to UK businesses, ensuring that money flows quickly through supply chains to help small enterprises thrive rather than spend an average of 86 hours a year chasing unpaid invoices.  

Ms Love added: “After highlighting the pernicious problems of late payment for many years, we’re particularly pleased to see proposals for reform moving forward. We hope reform will make a real difference to SME cashflow, better positioning firms to grow and invest.”