Payments regulator to be scrapped under new government plans  – UKTN

The UK payments regulator could be scrapped as the government doubles down on its commitment to slash red tape. 

City Minister Emma Reynolds said the government plans to bring the remit of the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA). 

Writing to Dame Meg Hillier, chair of the Treasury Committee, Reynolds said as part of Labour’s “Plan for Change” strategy, upcoming legislation will bring the role of the PSR into the FCA to “streamline” financial regulation. 

“Moving forward, as part of our Plan for Change, the government wishes to see a more streamlined regulatory environment which manages the burdens on all businesses, with minimal overlap between regulators’ responsibilities,” wrote Reynolds. 

“This requires a rethink of existing regulatory structures for payments, so that firms can focus more of their resources on delivering valuable services and innovations that will deliver on the government’s central growth mission.” 

Under the proposed plan, the FCA will take on the responsibility of overseeing payments regulation and will be tasked with ensuring good behaviour and “promoting innovation and competition”. 

A government consultation to determine the details of the plan is expected in the summer, after which legislation will follow “as soon as possible”. 

For now, the PSR’s remit and ongoing work remains unchanged, but the group has been asked to take steps to work more closely with the FCA. 

“This will help realise the benefits of a streamlined regulatory environment and make the transfer of any functions to the FCA as smooth as possible,” Reynolds wrote. 

The PSR has an annual budget of £28m and a staff count of 160, but it already shares several senior staff with the FCA, as well as a shared office in Stratford, east London. 

Though the move has ostensibly been made to optimise regulation, some have written it off as a cosmetic change. 

“The closure of the PSR appears to be little more than a branding exercise,” said Jonathan Frost, director of global advisory for EMEA at BioCatch. 

“As a subsidiary of the FCA, sharing both office space and personnel, its functions are already deeply integrated. Beyond dropping a logo, it’s unclear what, if anything, will materially change. 

“Good consumer outcomes in the financial services sector depend on the effective regulation of payment services. Given this, it makes sense for a single agency to ensure that financial institutions adhere to the expectations set out in the FCA’s Consumer Duty.” 

The PSR was created as a separate entity within the FCA in 2015, at a time when payments fintechs and challenger banks like Wise, Revolut and Monzo were taking off. 

The group was created to “promote competition and innovation in payment systems, and ensure they work in the interests of the organisations and people that use them” according to the PSR. 

Within its remit is the tackling of push payment fraud – the most common form of financial crime impacting UK consumers. 

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