The UK government is set to dissolve the Payment Systems Regulator (PSR) and transfer its functions to the Financial Conduct Authority (FCA).
This decision forms part of an initiative aimed at simplifying financial regulation and fostering economic growth.
Currently, the PSR oversees various payment systems, including MasterCard and bank transfers, addressing issues related to fraud, fee structures, and competition among financial institutions.
However, businesses have expressed concerns regarding the complexity of the UK’s regulatory system, which involves three separate entities, namely the FCA, the Bank of England’s Prudential Regulation Authority (PRA), and the PSR.
According to the UK government, bringing the PSR under the FCA is intended to create a unified point of contact for businesses, thereby minimising operational costs. This particularly benefits smaller enterprises that are looking to grow.
UK 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.”
Further announcements on reducing regulatory complexities are expected from the government soon. This move aligns with a broader strategy to support economic development through regulatory simplification.
The current framework poses challenges for smaller firms due to higher relative costs associated with compliance.
Until new parliamentary legislation is enacted, there will be no immediate changes to the responsibilities or operations of the PSR. The regulator will retain its statutory powers during this interim period.
To ensure a seamless transition and sustain market competitiveness, PSR and FCA will be collaborating with each other, said the government.
The PSR has welcomed the government’s commitment to ensure effective regulation of payment systems, thereby addressing a gap that existed prior to its formation.
The UK payments regulator stated: “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.”
