UK consults on closing the Payment Systems Regulator

HM Treasury has opened a consultation on moving the functions of the Payment Systems Regulator into the Financial Conduct Authority. The proposals largely replicate the scope and substance of the existing regulatory regime for payment systems. The consultation closes on 20 October 2025.

A streamlined approach to payment systems regulation

Earlier this year the UK Government announced plans to abolish the PSR to reduce the number of regulatory bodies that the payments industry needs to engage with. The FCA will take on the PSR’s responsibilities, including for promoting competition and innovation in payment systems, using powers under the Financial Services and Markets Act 2000 (FSMA).

The PSR is the UK’s economic regulator for payment systems. Having been set up in 2015, it regulates payment systems designated by HMT and the participants in those systems. Under the more streamlined framework for payment systems regulation:

• The FCA will be responsible for conduct and economic regulation,
• The FCA and Prudential Regulation Authority will be responsible for prudential regulation, and
• The Bank of England will be responsible for financial stability.

Meet the new boss, same as the old boss

The consultation focuses on core design decisions for the FCA’s payment systems regulatory regime. These generally seek to mirror the current regime. For example, there will be no change to:

• Who is subject to regulation: All designated payment systems will be transferred over to the FCA’s oversight
• The designation process: HMT wants to keep the current approach to designating payment systems and does not plan to create a new regulated activity in connection with payment systems
• Supervision and enforcement: HMT expects the FCA’s existing powers, with some tweaks, will enable it to continue the PSR’s regulatory and competition, enforcement, and information and investigation activities

Areas for further consideration

HMT recognises that some change will be necessary. For example, HMT is considering:

• Directions v rules: Whether the FCA should continue the PSR’s approach of making directions or instead switch to setting rules, as it does for other areas of financial regulation
• Fair access: Removing the regime under the Payment Services Regulations 2017 which allow for access to payment systems, given that it overlaps with similar rules set elsewhere in legislation
• Objectives: Giving the FCA new objectives to reflect the substance of the PSR’s objectives and applying the FCA’s strategic objective (to ensure that markets function well) and secondary objective to facilitate the international competitiveness and growth of the UK economy to its regulation of payment systems

Next steps

HMT invites feedback on the consultation by 20 October 2025. It will then bring forward legislation to introduce the new framework.

Separately, by the end of the year a Payments Vision Delivery Committee will publish a Payments Forward Plan. This plan will sequence future initiatives in both retail and wholesale payments, and the role of digital assets.