The UK’s departure from the European Union provides the industry with ‘an opportunity to think afresh about regulation and supervision’, according to the UK Payments Regulation Review.
Composed by The Payments Association, UK Finance, and global law firm Latham & Watkins, the paper called ‘UK Payments Regulation Review: Making sense of where to go now’ brings an in-depth view on the post-Brexit opportunities UK lawmakers and regulators can utilise to advance the national payments infrastructure through the introduction of new digitised frameworks.
Jana Mackintosh, UK Finance, said: “We believe that regulators and industry have an opportunity to think afresh about payments regulation and supervision. This industry report will help players in the sector to reflect on the digitalisation of payments and consolidate past learnings that can be drawn upon as the industry moves forward.”
Seeing the payments industry as the most important wheel cog of the UK economy, the report suggests that the sector should regulate itself through collaborative efforts by both market players and stakeholders.
Furthermore, as UK firms continue to engage with international actors, the report additionally highlights the importance of frictionless cross-border payments, being proactive with SEPA, and maintaining high-level of participation in the global market infrastructure.
Brett Carr, Senior Associate Fintech & Payments, Latham & Watkins, commented: “We are proud to lend our firm’s legal expertise and deep fintech and payments experience to this report at such an important time for the sector. The UK and EU payments markets have experienced a prolonged period of regulatory change punctuated by implementation challenges, the impacts of Brexit, Covid-19 and a shifting supervisory strategy of the regulators.
“With question marks remaining over the UK’s priorities for the regulation and development of the fintech sector, market participants will be anticipating how the regulatory environment is set to progress. This report presents a compelling case for greater cooperation between the industry, lawmakers, and regulators, and calls for an evolution in approach that both enables and supports innovation.”
Emerging technologies such as distributed ledger and digital identity are also expected to bring innovations and improve the way the payments sector operates.
Tony Craddock, Director General at The Payments Association, added: “It is an exciting and challenging time to be in the payments space. In a very short time, we have seen the explosive growth of the FinTech industry, the arrival of distributed ledger technology like cryptocurrency and stablecoins and the UK leaving the EU while simultaneously adopting PSD2 regulations.
“This is a timely report that grapples with the major issues in the payments industry and produces ideas on how to create the next generation of regulations, and we are keen to see how the wider industry reacts to the proposals we make.”