UK confirms closure of Payment Systems Regulator

The UK will abolish the Payment Systems Regulator as part of an efficiency drive. The Government explains that axing the PSR is a response to complaints from the industry that the regulatory environment is too complex, with payments firms having to engage with multiple regulators.

The PSR’s functions will not disappear. Instead they will be rolled into the Financial Conduct Authority. HM Treasury expects to consult in the summer on the details of what this transfer will look like and then legislate as soon as possible.

The announcement does not make any immediate changes but, looking ahead, transferring functions from the PSR to the FCA raises several important questions, including:

• Objectives: How will the FCA take on the role currently delivered by the PSR? And how will the FCA’s statutory objectives change?
• Directions: What happens next to the PSR’s existing directions? And how will they be ingested into the FCA’s rulebook?
• Policy: Will there be a change in policy – or speed of delivery – for the PSR’s ongoing work, such as its consultation on upgrading Faster Payments infrastructure?
• Vision: How will these developments impact the National Payments Vision, including the Payments Vision Delivery Committee which comprises the Bank of England and PSR? And what will this mean for the UK’s plans to renew retail payments infrastructure?

The National Payments Vision already envisaged the FCA and PSR reducing regulatory overlap. In a statement the PSR points out that it does not need to wait for the legislative changes to realise the benefits of a more streamlined regulatory approach and notes the recent work bringing the PSR and FCA closer together.