Payment Systems Regulator—establishment, constitution and remit

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Payment Systems Regulator—establishment, constitution and remit
  • Establishment of the PSR
  • Constitution and governance of the PSR
  • The Panel
  • Remit of the PSR
  • Interchange Fee Regulation
  • Payment Accounts Regulations 2015
  • PSR regulatory fees regime
  • Verification and provision of transaction and contact data
  • The PSR’s fees collection method
  • More...

Payment Systems Regulator—establishment, constitution and remit

Establishment of the PSR

The UK government commissioned in 1998 an independent review of the banking industry and the review report (the Cruickshank report) which was published in March 2000. The Cruickshank report identified, among other concerns, the problems of governance, transparency and innovation faced by the payment systems industry. Following the Cruickshank report, in 2004 the Office of Fair Trading (OFT) set up the Payment Systems Task Force, whose responsibilities were later transferred to the Payments Council.

At the time, UK payment systems were effectively self-regulating. While the Bank of England (BoE) had certain supervisory powers over UK payment systems, the Payments Council, a trade association, was responsible for setting strategies and detailed requirements for payment systems. The Payments Council was a voluntary membership industry body and the majority of its members are financial institutions within the payments industry.

In August 2011, the House of Commons Treasury Select Committee published a report identifying the ineffectiveness of the Payments Council and recommending that the Payments Council should be brought within regulation. In March 2013, HM Treasury issued a consultation on opening up UK payments and identified a number of concerns with UK payment systems including:

  1. competition—the payment systems market was primarily dominated by large banks, which hindered smaller businesses from entering into the market

  2. innovation—the network nature of payment systems

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