Payments Industry Warns That HM Treasury Proposals Risk Jeopardising UK Payments Reform

The Payments Association, a trade body representing the payments sector, has submitted its response to HM Treasury’s consultation paper, “A Streamlined Approach to Payment Systems Regulation,” concerning the proposed transfer of the Payment Systems Regulator’s (PSR) functions to the Financial Conduct Authority (FCA).

The payments industry warns that the HM Treasury proposals risk under-delivering on real reform of UK payments regulation.

Riccardo Tordera-Ricchi, Director of Policy and Government Relations at The Payments Association, said: “We welcomed the government’s earlier ambition to abolish the PSR and cut regulatory burden by 25%. But at this stage the proposals read more like a reshuffle than a reform. The risk is we end up with the same problems under a different roof.

The Payments Association strongly supports the National Payments Vision – the government’s strategy for a world-leading payments ecosystem – and urges that focus is maintained as the Retail Payments Infrastructure Board (RPIB) and New Delivery Company (DeliveryCo) are stood up. These latest developments highlight the enhanced role of the Bank of England (BoE) in driving the strategy for retail payments infrastructure, and the Association calls for the government to use this opportunity to reinforce the Bank’s strategic role.

The Association’s support for the proposed transfer is, however, strictly conditional on:

• clear delineation of roles between the FCA and the Bank of England

• credible regulatory burden reduction

• protection of statutory fair access

• coherent competition remit

Tordera-Ricchi added: “Our members stress the need for flexible, proportionate supervisory tools without duplicative rules or directions. Concerns remain about who will have clear responsibility for competition oversight in the payments market, with participants keen for greater clarity on this point. In addition, stakeholders continue to highlight ambiguity around the respective roles and responsibilities of the FCA and the Bank of England, calling for these to be clearly defined and communicated.”

Alongside reinforcing the Bank of England’s elevated role – potentially including updates to the Memorandum of Understanding to reinforce the Bank’s veto rights over the FCA’s decisions and actions – The Payments Association has called for strengthened oversight and clearer accountability, including a robust post-implementation review after 12 months.