Are you ready for the Payment Systems Regulator?

Are you ready for the Payment Systems Regulator?

In light of the Payment Systems Regulator (PSR) becoming operational as of today, Jacob Ghanty, partner at Berwin Leighton Paisner LLP, discusses its proposed approach to regulation and how the changes will impact the payment systems industry.

Is much likely to change in the PSR’s approach to regulating payment systems following the publication of its consultation response and policy statement?

The PSR published its first consultation paper (PSR CP14/1) in November 2014, in which it sets out its vision for a new regulatory framework for payment systems in the UK (see New Payment Systems Regulator consults on how it intends to regulate LNB News 13/11/2014 119). The PSR states that it intends to open up the payments industry, making it easier for a wider range of parties to access payment systems, and compete and innovate around them.

Alongside the consultation, the PSR issued a series of supporting papers, each of which focuses on a particular aspect of the PSR’s policy proposals. The proposals are grouped into these topics:

  • industry strategy
  • ownership, governance and control of payment systems
  • direct access to payment systems
  • indirect access to interbank systems
  • interchange fees
  • regulatory tools

As a subsidiary of the Financial Conduct Authority (FCA), I expect the PSR to take more of an FCA-style watchdog approach, rather than a Bank of England/Prudential Regulation Authority (PRA) prudential style of regulation. However, I believe it will be more than simply a mini FCA. The PSR will have a different feel from the FCA, in the sense that it intends to lead payments industry strategy. It will replace some functions of the UK Payments Council, which will give it a slight sense of being a trade association.

I don’t expect there to be too much change in the PSR’s approach as set out in PSR CP14/1. Many of the issues are long-term ones (eg ownership of the interbank systems) and I would be surprised if there was any change of direction in terms the main policy proposals.

What are the main impacts on the payments

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