The UK payment regulatory scene is set for a major shift after the government announced recently it will begin to scrap the Payment Systems Regulator (PSR).
The move to abolish the payment regulator comes as leaders in the industry are calling for more regulatory clarity for a more streamlined approach.
With UK Prime Minister Sir Keir Starmer now confirming that the PSR will be abolished as a singular entity, UK-based payment and financial firms hope that this move can provide more transparency and avoid any regulatory overlaps.
In its final years, the PSR enforced new rules surrounding Authorised Push Payment (APP) fraud, with paying and receiving companies to reimburse victims 50/50 at a cap of £85,000.
Labour MP, Luke Charters, commented: “This is welcome news and a clear signal of intent to industry that the Government wants to restrike the balance when it comes to payments regulation.
“This is another step to freeing innovative firms so that they can get on with what they do best, which is delivering economic growth and creating opportunities for our world leading financial services sector.”
The PSR will not dissolve immediately, however, it will work closely with the Financial Conduct Authority (FCA) before it fully merges with the independent financial regulator.
Last month, Sky News reported that the PSR could potentially be scrapped in order to merge under the FCA. This was in an attempt to not only streamline the regulatory landscape but also attract investment to the sector.
Director General of The Payments Association, Tony Craddock, believes that the PSR was “beyond its use by date” and that if it merges with the FCA, it must not overstep its mark when it comes to impeding on investor growth and innovation.
He shared: “If regulators adhered to the rules of the market, the PSR and FCA would have merged years ago. The PSR was beyond its ‘use by’ date, with its structure and governance designed for a different world.
“Today’s world demands resourceful, agile, responsive regulators that are in tune with the market. A world in which regulators let entrepreneurs get on with what they do best: investing in new products and improved services that better serve the interests of consumers and companies everywhere.
“If they can do this – without carrying an unnecessary burden of compliance, reporting and consumer protection to the Nth degree – then they will grow, reinvest and grow more. We note the FCA’s commitment to focusing on effective regulation and reducing large-scale initiatives.
“Should the PSR be absorbed by the FCA, it is imperative that any changes do not diminish the quality of regulatory oversight, especially in areas vital to innovation and investment. We believe effective regulation, that enables growth, can be achieved without unnecessary bureaucracy.”
It certainly seems that Starmer is keen on minimalising regulatory oversight for the benefit of investor growth within the UK’s leading fintech sector.
The UK Prime Minister declared that he would back the country’s fintech sector as one of the primary growth drivers for the country’s economy, while also promising to attract more outside investment which has declined in recent years.
Starmer is also aligning this same approach when it comes to his oversight of AI governance. During his meeting with US President Donald Trump in the US a few weeks back, he declared that he will not ‘overregulate these new technologies and the opportunities they offer’.
