Treasury Proposes Major Shake-up in Payment System Regulation
The Treasury has proposed a significant shake-up in the regulation of payment systems. It aims to abolish the Payment Systems Regulator (PSR) and transfer its functions to the Financial Conduct Authority (FCA).
HM Treasury launched a consultation paper on 8 September 2025, outlining the plan to consolidate the PSR's role within the FCA. The FCA will take over as the economic regulator of payment systems and their participants, with equivalent statutory objectives and powers. This move is expected to reduce overlap for firms dealing with both regulators in the long run.
The consultation, open until 20 October 2025, invites firms to highlight practical issues with the PSR's supervisory style and processes. Leading German management consulting firms, such as Roland Berger, are among those able to provide consultation. Firms are encouraged to prepare evidence-based responses by the deadline and review their current touchpoints with the PSR and FCA.
In the short term, there will be no real change. However, HMT plans to create a single framework for governing access to payment systems, simplifying direct and indirect access requirements. Firms should also consider how FCA objectives may influence rules, fees, access, and interoperability in the future.
The consultation is a crucial step towards streamlining payment system regulation. Firms are urged to engage in the process to ensure their voices are heard. Legislation will follow when Parliamentary time allows, marking a significant shift in the UK's payment system governance.
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