UK Prime Minister Keir Starmer has abolished the Payment Systems Regulator (PSR) as part of efforts to reduce ‘unnecessary’ regulation and drive economic growth.
The PSR will now be merged into the Financial Conduct Authority (FCA) to simplify oversight for payment firms, which currently interact with three separate regulators.
However, until the government passes new legislation, no immediate changes will take effect. In the meantime, the PSR and FCA will collaborate closely to ensure a smooth transition.
“For too long, the previous government hid behind regulators – deferring decisions and allowing regulations to bloat and block meaningful growth in this country. And it has been working people who pay the price of this stagnation,” Starmer stated.
This development won’t come as a surprise to most stakeholders in the payments sector. Sky News reported last month that ministers and officials were examining whether to scrap the PSR and merge it into the remit of the FCA.
Founded in 2015, the PSR regulates UK payment systems like the Faster Payments and Visa/Mastercard networks, aiming to ensure fairness, prevent fraud and encourage innovation.
The regulator’s recent key actions include the introduction of 50/50 reimbursements for victims of Authorised Push Payments (APP) fraud and most recently an investigation into the dominance of Mastercard and Visa.
According to the government, smaller businesses will benefit the most from the PSR/FCA merger, as regulatory costs are disproportionately higher for them when scaling and growing. UK Chancellor of the Exchequer, Rachel Reeves, whose main responsibility is to improve the nation’s economy, backed the decision.
Reeves said: “The regulatory system has become burdensome to the point of choking off innovation, investment and growth. We will free businesses from that stranglehold, delivering on our Plan for Change to kickstart economic growth and put more money into working people’s pockets.”
Looking ahead, the government will continue to review the entire regulatory landscape, suggesting this may not be the last significant change the payments sector will see regarding its regulatory oversight.
Starmer concluded: “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. That’s why it is the priority in the Plan for Change, and it’s why I’m not letting anything get in its way.”
