UK Government's Proposals to Streamline Payment Regulations Include Abolishing PSR
The UK government has announced plans to consolidate the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA), a move that is expected to simplify and clarify payments regulation while potentially benefiting smaller businesses.
In a statement, Chancellor Rachel Reeves expressed her support for the consolidation, stating that it is part of the Plan for Change to kickstart economic growth and put more money into working people's pockets. Prime Minister Keir Starmer also announced the plan, emphasizing that it is a step towards reducing regulatory burdens on businesses and driving up living standards.
The PSR, which oversees payment systems such as Faster Payments, welcomed the government's commitment to maintaining effective regulation of payment systems. In a pragmatic approach, the PSR described the consolidation as the next step in simplifying and clarifying payments regulation.
The consolidation aims to integrate the PSR’s functions within the FCA while maintaining the PSR’s existing responsibilities until legislation permits full transfer. This includes joint horizon scanning, coordinated policies, and collaborative supervision, which could lead to more streamlined and coherent regulation affecting smaller businesses.
One of the key benefits of the consolidation for smaller businesses is the focus on innovation and growth. The PSR plans to continue working on initiatives critical to payments infrastructure and innovation, such as variable recurring payments and open banking development under the FCA’s leadership. This may benefit smaller businesses by enhancing payment options and competition.
The FCA and PSR have also recognized the challenges small businesses face, such as difficulties in accessing finance, bank accounts, and protection from fraud and scams. The consolidation process includes awareness of these SME-specific issues, with calls for vulnerable small businesses to receive appropriate support and redress mechanisms.
The consolidation is also expected to have a significant impact on smaller businesses, particularly in terms of cost reduction. By making it easier for firms to navigate regulatory requirements, the consolidation could help reduce the administrative burden on smaller businesses, freeing up resources for growth and innovation.
The PSR will continue to have access to its statutory powers until legislation is passed by Parliament to enact these changes. The PSR's managing director has already joined the managing director of the PSR role with that of executive director of payments and digital finance at the FCA.
In conclusion, the consolidation is expected to foster a more integrated regulatory framework that could improve transparency, innovation, and consumer protections, potentially benefiting smaller businesses by addressing their specific challenges and supporting payment system advancement. However, the full impact depends on upcoming legislation, consultations, and how effectively the FCA adopts and applies the PSR’s functions.
Sources: [1] Gov.uk [2] FCA [3] PSR [4] FCA [5] FCA
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