UK Prime Minister Keir Starmer described it as a “pragmatic step” but the Labour government’s decision to abolish the Payment System Regulator on May 11, is likely to cause concern.
The decision initiates the PSR’s reintegration with its former steward, the Financial Conduct Authority (FCA), i, as the Labour government seeks to reduce regulatory burdens on firms and create what it calls a “more cohesive oversight of the financial system”.
On paper the pragmatic approach is welcomed. However, the government’s decision to end independent PSR oversight will ultimately be judged on whether it achieves an effective balance between regulatory efficiency and industry accountability.
Throughout its decade of existence, the PSR operated with clear mandates: “promote competition and innovation in payment systems”, to “ensure payment systems operate for the benefit of all users” and to ”manage a competitive market for payment systems and related services”.
These founding objectives deserve careful consideration. The PSR was established in 2015 when the government determined an independent watchdog was needed to address growing concerns of a power imbalance in UK payments favouring big banks over the mechanisms of Bacs and CHAPS.
The PSR was deemed necessary in the government’s view to democratise new payment utilities coming into existence such as Open Banking, fintech, peer-to-peer wallets.
Legacy in question
The PSR’s post-mortem can be dissected in many ways. This article chooses to focus on whether the regulator delivered meaningful impact and improved the UK business landscape at a point of inflection for payment systems and services.
In terms of enabling business and innovation, the PSR’s most significant contribution was broadening the UK’s payment infrastructure, which had previously been dominated exclusively by major banks leveraging Bacs, CHAPS and Faster Payments.
By 2020, the regulator had achieved its clearest success: expanding open access to the UK’s payment infrastructure. Fintech challengers such as TransferWise (now Wise), Revolut and Monzo gained direct participation in Faster Payments, delivering both greater consumer choice and strengthening the UK’s fintech credentials.
Over the next few years, the regulator found itself overseeing a rapidly changing payments sector, while confronting emerging and progressively complex challenges.
This came to a crescendo in October 2024 with the introduction of new rules governing Authorised Push Payment (APP) fraud reimbursement. Though initially met with some pushback from the industry, implementation has proceeded relatively smoothly
Meanwhile, facing pressure to stimulate economic growth, successive governments positioned UK finance, fintech and payments as a key pillar of a “National Growth Strategy” – an appealing political narrative but tough reality for business.
This has come with a new regulatory approach and a focus on efficiency, ultimately leading to the Labour government’s decision to merge the PSR and FCA – a move questioning regulatory independence.
New mission or bureaucratic dilution?
The integration process moved decisively in May 2025 when the FCA appointed David Geale, Executive Director of Payments and Digital Finance as Managing Director of the PSR — confirming that the merger was underway.
There is no space for ambiguity as the PSR integration is not just procedural but operational, with Geale assuming oversight responsibility for both traditional payment systems and the UK’s expanding regulation of cryptoassets. This fusion of responsibilities underscores the FCA’s increasingly sprawling jurisdiction.
The FCA now faces the challenge of an enlarged workload spanning everything from insurance and capital markets to retail conduct. This raises questions about whether payment system innovation and access will still receive dedicated attention.
While the move is intended to eliminate duplication and increase coordination, critics argue that this consolidation could dilute the PSR’s distinct user-focused mission.
The merger raises eyebrows over whether the consolidation of oversight will freeze innovation momentum for payments.. The PSR had sought to encourage alternative utilities and models including Open Banking, real-time settlement systems, and digital wallets.
“These were not glamorous fights,” a former PSR adviser told the Treasury Committee. “But they mattered. And without a dedicated regulator pushing them, they risk fading from view.”
Geale’s leadership will inevitably face intense scrutiny. A veteran of the FCA since its inception, he has led its work on retail banking and payments, and served as a critical link in coordinating the UK’s approach to digital finance.
His promotion should signal a continuity in oversight, if not in institutional boundaries. Yet, observers will watch closely to see whether his leadership brings strategic clarity or bureaucratic dilution.
Labour 2025: What are you mourning about!
The government frames the PSR’s abolition as a move toward “smarter regulation”.
However, legitimate concerns exist that eliminating an independent regulator in a rapidly evolving technology sector like payments sends the wrong message around consumer protection and market fairness. This comes at a time of heightened sensitivity to the encroachment of big tech.
A decade into its existence, the PSR joins the ranks of NHS England, the Office for Local Government (OGLOG), Education and Skills Funding Agency (ESFA) and Wildlife Crime Unit (WCU) as another agency disbanded by a government seeking to “deliver on efficiency”.
Regulation can easily be determined as “unnecessary red tape,” but in the case of payment systems – which underpin all forms of economic activity – robust scrutiny, equitable access, and genuine competition,are essential to functioning markets and viewed as such by the end-user (the consumer!)
The ultimate judgement will be on Labour. Should the FCA fail to maintain the PSR’s core principles of competition, transparency, and consumer protection, the merger will represent an abject failure. While easy narratives have long-existed in tech policy, the practical reality remains that a government cannot simply “restart a payment infrastructure”.
