The UK Government has confirmed plans to abolish the Payment Systems Regulator, slashing red tape in a bid to boost economic growth.
The PSR - which looks after payment systems like Faster Payments and the major card schemes - will mainly be consolidated into the Financial Conduct Authority, making it easier for firms to deal with one port of call.
The PSR is a fully independent subsidiary of the FCA, but shares some operational services and office space.
Under the plans, the PSR will continue to have access to its statutory powers until legislation is passed by Parliament to enact these changes.
Responding to the Government's plans, the PSR states: "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. We have, for example, already joined the managing director of the PSR role with that of executive director of payments and digital finance at the FCA."
Chancellor, Rachel Reeves, says: "The regulatory system has become burdensome to the point of choking off innovation, investment and growth. We will free businesses from that stranglehold."
The move to axe the PSR follows complaints from businesses that the regulatory environment was too complex - with payment system firms having to engage with three different regulators, costing them time, money and resource.
Prime Minister Keir Starmer, says: "For too long, the previous Government hid behind regulators - deferring decisions and allowing regulations to bloat and block meaningful growth in this country. 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."
The decision has been applauded by The Payments Association. Riccardo Tordera, director of policy and government regulation, says: "The PSR very much sealed its own fate by continuing to ignore the industry’s advice on APP fraud. Although it could be commended for its last-minute U-turn to lower the threshold. A long series of mistakes has triggered a complete rethink on the point of its existence. It’s about time a bold decision was made."
Not all in the industry are convinced of the logic behind the rehetoric.
Jonathan Frost, director of global advisory for Emea at BioCatch, comments: “The closure of the PSR appears to be little more than a branding exercise. As a subsidiary of the FCA, sharing both office space and personnel, its functions are already deeply integrated. Beyond dropping a logo, it’s unclear what, if anything, will materially change.
“Good consumer outcomes in the financial services sector depend on the effective regulation of payment services. Given this, it makes sense for a single agency to ensure that financial institutions adhere to the expectations set out in the FCA’s Consumer Duty.”
The move to axe the PSR is in keeping with an ongoing purge of regulatory bodies under the current Government. The chairman of the Competition and Markets Authority, Marcus Bokkerink, was ousted last month amid concerns that it was hindering growth.
Bokkerink was replaced by Doug Gurr, a former Amazon executive.
Since then, both the chair and chief executive of the Financial Ombudsman Service have announced plans to step down.