Global: UK Payments Sector Criticizes Government’s Regulatory Overhaul as “Reshuffle, Not Reform”

The UK government’s plan to dissolve the Payment Systems Regulator (PSR) as part of a broader effort to streamline oversight and stimulate economic growth has sparked criticism from industry leaders, who argue that the proposal lacks meaningful reform.

According to the Payments Association, the proposal — which would transfer most of the PSR’s responsibilities to the Financial Conduct Authority (FCA) — appears to be “more of a reshuffle than a reform.” The group warns that the move could undermine ongoing payments innovation and jeopardize the UK’s ambition to build a world-leading digital payments ecosystem.

The government announced earlier this year that it intends to abolish the PSR, which currently oversees systems such as Faster Payments and major card networks, consolidating its functions under the FCA. The decision forms part of the government’s National Payments Vision, aimed at cutting “regulatory congestion” and fostering a payments framework powered by next-generation technologies to drive economic growth.

Initially, the Payments Association welcomed the government’s intention to wind down the PSR. Its director of policy and government regulation, Riccardo Tordera-Ricchi, said at the time that the PSR had “sealed its own fate” and that “it’s about time a bold decision was made.”

However, in its formal response to the government’s consultation paper, the association expressed growing concernsabout the lack of clarity surrounding the post-PSR regulatory structure, warning that the current plan could “risk jeopardising UK payments reform.”

While reaffirming support for the National Payments Vision, the association emphasized that its endorsement of the restructuring depends on several conditions:

• A clear delineation of responsibilities between the FCA and the Bank of England.

• A credible reduction in regulatory burdens for firms.

• Protection of fair access to payment systems.

• A coherent competition oversight framework to prevent market concentration.

“Our members stress the need for flexible, proportionate supervisory tools without duplicative rules or directions,” said Tordera-Ricchi. “Concerns remain about who will have clear responsibility for competition oversight in the payments market, with participants keen for greater clarity on this point.”

He added that ongoing ambiguity between the roles of the FCA and the Bank of England remains a pressing issue for industry participants. “Stakeholders continue to highlight uncertainty around their respective responsibilities, and we urge the government to ensure these are clearly defined and communicated,” he said.

As the UK positions itself to remain competitive in the global payments landscape, industry players caution that regulatory precision and effective collaboration will be crucial to ensuring the reforms truly enhance innovation rather than complicate it.