The Payments Association has warned that the Labour government’s overhaul of the payments regulation regime amounts to more of a “reshuffle than a reform”.
The association, which acts as the trade body representing the payments sector, said the government’s announced changes risk leaving many underlying problems untouched, claims City AM.
Chancellor Rachel Reeves set out her vision for a transformed payments system in her 2024 Mansion House address, pledging “decisive action to progress open banking and support our FinTech businesses”. In that speech she introduced the concept of a new National Payments Vision (NPV), signalling an intended step-change in regulation. However, the Payments Association maintains that the weakness lies in how those intentions are being implemented.
In March this year the Payment Systems Regulator (PSR) – the body established in 2013 to oversee the payments sector – was abolished as part of the government’s drive to “free businesses” from what Reeves described as the “stranglehold” of burdensome regulation. The PSR’s responsibilities are to be “mainly consolidated” into the Financial Conduct Authority (FCA), according to Downing Street. While the industry welcomed the move in principle, it voiced concern over unclear institutional arrangements.
Riccardo Tordera-Ricchi, director of policy and government relations at the Payments Association, said: “While the move to axe the PSR was welcome the changes risk resulting in the same problems under a different roof.” He added that the association had “ambiguity around the respective roles and responsibilities of the FCA and the Bank of England” and urged that “these be clearly defined and communicated”. He also highlighted that “concerns remain about who will have clear responsibility for competition oversight in the payments market”.
In addition to institutional clarity, the Payments Association pressed the government to commit to a “robust” post-implementation review twelve months after the changes, so the industry can determine whether the new regime delivers on its promised aims of growth, clarity and reduced regulatory burden. Meanwhile the Department for Business and Trade (via business secretary Peter Kyle) has pledged to cut regulatory burdens by 25 % and identified “absurdities” in the current multi-watchdog environment.
The Payments Association’s verdict is that while the headline ambition presented in the NPV was bold, the implementation currently appears to shuffle the deck rather than fundamentally rewrite the rules. With major custodial functions shifting and roles being redrawn, industry participants are calling for greater transparency, sharper delineation of regulatory roles, and firm oversight mechanisms to ensure the intended benefits materialise.
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