UK Government's proposals to streamline payment regulations include the scrapping of the Payment Systems Regulator (PSR)
The UK Prime Minister, Keir Starmer, has announced plans to abolish the Payment Systems Regulator (PSR) and consolidate it into the Financial Conduct Authority (FCA). This move is part of Starmer's plans to reduce the "burdens" on business by removing red tape and boost economic growth in the UK.
The PSR, since its establishment, has played a significant role in supporting Open Banking, promoting competition, and introducing world-leading protections for victims of fraud. It has also combined the managing director of the PSR role with that of the executive director of payments and digital finance at the FCA.
Chancellor Rachel Reeves has stated that the regulatory system is burdensome and is planning to free businesses from this stranglehold. She aims to kickstart economic growth and put more money into working people's pockets. The consolidation of the PSR is expected to make it easier for firms to deal with one regulatory body, thereby reducing costs, particularly for smaller businesses.
The PSR has welcomed the government's commitment to maintaining effective regulation of payment systems. It has expressed its commitment to working with the government, the FCA, and the Bank of England on the transfer of regulatory responsibilities. The PSR has also called the consolidation a pragmatic next step in simplifying and clarifying payments regulation.
The consolidation of the PSR is expected to have the greatest impact on smaller businesses, as the costs associated with the PSR are disproportionately higher for them. Until now, payment system firms have had to engage with three different regulators, which adds to their operational costs.
The Government has confirmed that the PSR will continue to have access to its statutory powers until legislation is passed by Parliament to enact these changes. The PSR has not yet stated any immediate changes to its ongoing program of work or its remit, as confirmed by the Government.
Further reading suggests that the FCA plans to deliver VRP (Variable Recognised Provider) and Open Finance in 2025 to support growth in the UK. This initiative aims to make it easier for consumers to manage their finances and make informed decisions, ultimately contributing to economic growth.
In conclusion, the consolidation of the PSR into the FCA is a significant step towards simplifying the regulatory landscape for businesses and potentially boosting economic growth in the UK. The PSR's commitment to working with the government, the FCA, and the Bank of England on the transfer of regulatory responsibilities indicates a smooth transition process.
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