UK Government intends to streamline payment regulations by dismantling the Payment Systems Regulator (PSR)

The Payment Systems Regulator (PSR) has welcomed the UK Government's commitment to maintaining effective regulation of payment systems, as it prepares for consolidation into the Financial Conduct Authority (FCA).

Chancellor Rachel Reeves expressed support for the Plan for Change, a government initiative aimed at boosting economic growth and increasing money in working people's pockets. The consolidation is part of an effort to reduce "burdens" on business by removing red tape and boosting economic growth.

The move to consolidate the PSR into the FCA is expected to streamline the regulatory process for payment system firms, making it easier for businesses to operate by reducing the number of regulators they have to engage with.

Prime Minister Keir Starmer announced the plans, stating that this consolidation is a step towards kickstarting economic growth and driving up living standards. The PSR's role in supporting Open Banking, innovation, promoting competition, and introducing world-leading protections for victims of fraud will continue, albeit under the FCA's umbrella.

The PSR has already started the process of integration, with the managing director of the PSR role combined with that of executive director of payments and digital finance at the FCA. The PSR will continue to have access to its statutory powers until legislation is passed by Parliament to enact these changes.

The PSR has expressed pride in its achievements since its establishment and called the consolidation a pragmatic next step in simplifying and clarifying payments regulation. The consolidation is expected to have the greatest impact on smaller businesses, as the costs are disproportionately higher for them.

However, the PSR is committed to ensuring a smooth process during the transfer of regulatory responsibilities. It has confirmed its commitment to working with government, the FCA, and the Bank of England on the transition.

Chancellor Rachel Reeves stated that the regulatory system is burdensome, hindering innovation, investment, and growth. The consolidation is part of a broader effort by the UK Government to reform and simplify the regulatory environment for businesses.

Further reading: FCA to deliver VRP, Open Finance in 2025 to 'support growth' in the UK.

The PSR, which oversees payment systems such as Faster Payments, will make it easier for firms to deal with one regulator instead of three. The consolidation is expected to bring about a more efficient and effective regulatory system, benefiting both businesses and consumers alike.

UK Government intends to streamline payment regulations by dismantling the Payment Systems Regulator (PSR)