Payment Systems Regulator to be merged into FCA

The Government has announced that the Payment Systems Regulator (PSR) will be abolished and its remit absorbed by the Financial Conduct Authority (FCA). The move comes amid concern that the financial regulatory system is overly complex.

The PSR, which looks after payment systems like Faster Payments and Mastercard, will mainly be consolidated into the Financial Conduct Authority (FCA).

The Government has announced a move following on from complaints from businesses that the regulatory environment was too complex – with payment system firms having to engage with three different regulators, costing them time, money and resources.

Prime Minister, Keir Starmer said “For too long, the previous Government hid behind regulators – deferring decisions and allowing regulations to bloat and block meaningful growth in this country. And it has been working people who pay the price of this stagnation.

“This is the latest step in our efforts to kickstart economic growth, which is the only way we can fundamentally drive-up living standards and get more money in people’s pockets. That’s why it is the priority in the Plan for Change, and it’s why I’m not letting anything get in its way.”

Chancellor, Rachel Reeves, said “The regulatory system has become burdensome to the point of choking off innovation, investment and growth. We will free businesses from that stranglehold, delivering on our Plan for Change to kickstart economic growth and put more money into working people’s pockets.”

In a statement, the PSR said “The Government’s announcement is a pragmatic next step in simplifying and clarifying payments regulation. We welcome the government’s commitment to maintaining effective regulation of payment systems, which was a gap before the PSR was set up.

“Since then, the payments sector has dramatically changed, particularly over recent years. The PSR has played a central role, supporting open banking and innovation, opening up access to payment systems, promoting competition, and introducing world leading protections for victims of fraud. Colleagues should rightly be proud of all they have achieved.

“We’re committed to working with government, the FCA and the Bank of England as decisions are taken on the transfer of regulatory responsibilities and, when they are, help ensure the process is smooth. Legislation will take time, but we do not need to wait to realise the benefits of an even more streamlined regulatory approach. Doing so builds on recent work bringing the PSR and FCA closer together. We have, for example, already joined the managing director of the PSR role with that of executive director of payments and digital finance at the FCA.

“In the meantime, as the Government has been clear, there is an important role still to do on ensuring payment systems are competitive, innovative and safe.”