The UK government has promised to release a National Payments Vision. In his first speech of the year, the Managing Director of the Payment Systems Regulator emphasises the importance of turning this vision into action.
Open questions on Open Banking
Chris Hemsley looks ahead to 2024 as a “big year of implementation”. As well as the PSR’s action on fraud, he underlines the work to be done to unlock the full potential of Open Banking and specifically on scaling up the use of variable recurring payments as an alternative to direct debit.
The longer term model for Open Banking is still uncertain. Along with the FCA, the PSR leads the Joint Regulatory Oversight Committee which aims to put Open Banking on a sustainable commercial footing. The JROC will have in mind the recommendations made by last year’s Future of Payments review.
Meanwhile, Mr Hemsley says there is no clear path ahead for the New Payments Architecture. The NPA has faced several challenges and delays since it was launched seven years ago. Now the programme is paused pending publication of the government’s National Payments Vision.
Expanding the systemic perimeter
The government plans to give the Bank of England more power to oversee a broader range of payment providers. The aim is to make sure that systemic risks introduced by new intermediaries and payment rails are not overlooked by the current regulatory framework.
The government will bring forward legislation which would give the Bank of England more flexibility to assess stability risks across payment chains. Entities that meet systemic thresholds of risk could be recommended for recognition and so brought under the Bank of England’s supervision. This – together with oversight of systemic stablecoins and its work on the digital pound – indicates that the Bank of England is going to play a larger role in the future of UK payments.
Date for the diary: 2 February 2024 – the deadline for responding to the PSR’s call for views on expanding variable recurring payments.
This is the final post in our series looking at the outlook for payments regulation in the EU and UK. Read the Fintech and Payments section of our Financial Regulation Legal Outlook 2024 for more.