The UK Government has published its National Payments Vision (NPV), vowing to cut through the "regulatory congestion" facing the sector to deliver a world-leading ecosystem.
A year in the making, the NPV addresses the findings of the 2023 Future of Payment's Review, outlining the government's ambitions for building a payments ecosystem delivered on next generation technology that delivers economic growth.
Read the National Payments Vision
Tulip Siddiq, economic secretary to the Treasury, says: "The National Payments Vision...sets out the government’s ambitions for this vital sector, to achieve a trusted, world-leading payments ecosystem delivered on next generation technology, where consumers and businesses have a choice of payment methods to meet their needs."
A Payments Vision Delivery Committee is being set up to drive next steps, supported by an engagement group comprised of representatives from across the sector.
The NPV sets out plans for a clearer, more predictable and proportionate regulatory framework that sees watchdog's coordinate better. To support this, the government has sent a joint remit letter to the FCA and PSR outlining their responsibilities and aligning their objectives with the Vision’s goals.
Siddiq says this will "cut through the current regulatory congestion facing the sector".
Says the FCA: "The changes announced today will help ensure better coordination and clearer regulatory responsibilities. We will continue to work closely with the Payment Systems Regulator, the Bank of England and the government to deliver the vision we share."
The UK is in the process of developing a New Payments Architecture programme, which will replace the current Faster Payments and Bacs retail interbank payment system, with clearing and settlement taking place over a single purpose-built central infrastructure.
The NPV says that upgrading the UK's retail payments infrastructure has been "slow and challenging".
Therefore, it has concluded that a more "agile and flexible" approach to delivering the UK’s infrastructure is needed. To achieve this, it is establishing the Payments Vision Delivery Committee, which will, through work led by the Bank of England and PSR, clarify the upgrades required to the existing system, assess longer-term requirements and the appropriate funding and governance arrangements needed to deliver this - including proposals to reform Pay.UK.
Says a Pay.UK spokesperson: "The establishment of the Payments Vision Delivery Group is a key step towards regulatory coordination and a shared strategic direction. As we have previously stated, it is vital to establish clear roles, responsibilities, and accountability for successful implementation. Pay.UK looks forward to working collaboratively to develop a modern and sustainable payments infrastructure for the UK."
Addressing a major issue raised by the Future of Payments review, the Vision highlights the importance of open banking in enabling account-to-account payments.
To address this, regulatory responsibilities for Open Banking will move away from current arrangements to the FCA acting as the UK’s regulator in the future to "support the pace of progress on core activities to agree a sustainable commercial model and consumer protections".
Meanwhile, the PSR has committed to an independent post implementation review of the authorised push payment fraud reimbursement rules, after 12 months, while the government also "recognises the role that the technology and telecommunications sectors play" in tackling APP fraud.
On the future of a retail CBDC, the government is committing to explore a digital pound but stressing that any decision on a rollout will come with the introduction of primary legislation.
Tony Craddock, director general of The Payments Association welomes the plan, saying: “First, I believe this is exactly what we need to support growth in the UK. Directionally clear without being too prescriptive. Honest about our strengths and failings while respectful of the need for change. Creative without being too clever. Designed to reflect an industry that has stalled in places but is primed for growth. Directed towards a motivating purpose: ‘to achieve a trusted, world-leading payments ecosystem delivered on next generation technology, where consumers and businesses have a choice of payment methods to meet their needs.’”
Mark Brant, chief payments officer, NatWest, is also positive: “The steps that the government has outlined will help unlock growth in the UK economy, ensuring the UK’s global lead is not eroded by a complex regulatory change agenda which inhibits firms from providing innovative services that meet their duty to deliver good outcomes for customers.
“It’s time we fully realise the growth potential of digital and accelerating the implementation of open banking through enhanced commercial models. In addition to a focus on the core infrastructure to bolster innovation, we support a clear, predictable and resilient regulatory framework to build on the foundations, with a focus on the three pillars - Innovation, Security and Competition in the interests of the UK and the industry.”