The Office of Prime Minister Keir Starmer has notified British businesses that the Payment Systems Regulator (PSR) will be scrapped as a government agency.
The decision was taken to “reduce red tape on business” as the PM sets out “new steps to drive economic growth.”
The PSR was established in 2014 as a recommended measure of the Financial Services ‘Banking Reform Act’ of 2013 and HM Treasury’s consultation on “Opening Up UK Payments.”
Becoming operational in 2015, the PSR was primarily tasked with providing measures to tackle fraud in payments and to promote cooperative policies and innovations to improve the capacity of the UK’s payment network.
Additional responsibilities were added to the PSR, including the maintenance of cash access for British communities and providing key recommendations on payment provisions for the new Financial Services and Markets Act of 2023.
In its oversight of UK payments, the PSR could not determine regulations for payment systems, which are set by the Treasury for BACS, FPS, VISA, MasterCard, and LINK.
As such, the government has decided that the PSR will be consolidated under the Financial Conduct Authority (FCA), a move aimed at “making it easier for businesses to deal with one port of call.”
The move is influenced by feedback from businesses stating that the “regulatory environment was too complex – with payment system firms having to engage with three different regulators, costing them time, money and resources” – a factor believed to be impacting smaller businesses.
The Labour government stated that it would continue to listen to businesses as it applies its “Plan for Change” to boost the economy by reviving UK productivity, which has remained stagnant since the 2008 financial crisis.
Prime Minister Starmer said: “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. 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.”
Chancellor Rachel Reeves approved of the PSR’s termination as part of the government’s “deregulatory agenda,” which seeks to “set financial services regulators on a growth agenda.”
“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.”
In January, the Chancellor and Business Secretary Jonathan Reynolds wrote to all regulatory offices to come up with at least five reforms each that will boost economic growth. The Chancellor will scrutinise these proposals.
“The entire regulatory landscape will continue to be reviewed and refined as part of a wider Government effort to kickstart economic growth and make regulators work for the country, rather than block progress.”
