PSR abolished as part of UK Government plans to ‘simplify’ payments regulation

Prime Minister Keir Starmer has announced that the Payment Systems Regulator (PSR) will be abolished and “consolidated” into the Financial Conduct Authority (FCA), as part of plans to reduce the “burdens” on business by removing red tape, to boost economic growth.

The Prime Minister confirmed that consolidating the PSR – which looks after payment systems such as Faster Payments – into the FCA will make it easier for firms “to deal with one port of call”.

Up until now, payment system firms have had to engage with three different regulators.

The move to abolish the PSR is expected to have the greatest impact on “smaller businesses that are trying to scale and grow – as the costs are disproportionately higher for them”.

UK Prime Minister Keir Starmer

Prime Minister, Keir Starmer said: “For too long, the previous Government hid behind regulators – deferring decisions and allowing regulations to bloat and block meaningful growth in this country.

“And it has been working people who pay the price of this stagnation.

“This is the latest step in our efforts to kickstart economic growth, which is the only way we can fundamentally drive-up living standards and get more money in people’s pockets.”

The Government confirmed there will be no immediate changes to the PSR’s remit or ongoing programme of work and that it will continue to have access to its statutory powers until legislation is passed by Parliament to enact these changes.

Chancellor Rachel Reeves added: “The regulatory system has become burdensome to the point of choking off innovation, investment and growth.

“We will free businesses from that stranglehold, delivering on our Plan for Change to kickstart economic growth and put more money into working people’s pockets.”

In a statement, the PSR called it “a pragmatic next step in simplifying and clarifying payments regulation”.

“We welcome the government’s commitment to maintaining effective regulation of payment systems, which was a gap before the PSR was set up,” the organisation said in a statement.

“Since then, the payments sector has dramatically changed, particularly over recent years. The PSR has played a central role, supporting Open Banking and innovation, opening up access to payment systems, promoting competition, and introducing world leading protections for victims of fraud. Colleagues should rightly be proud of all they have achieved.”

The PSR confirmed its commitment to working with government, the FCA and the Bank of England “as decisions are taken on the transfer of regulatory responsibilities and, when they are, help ensure the process is smooth”.

The PSR has already joined the managing director of the PSR role with that of executive director of payments and digital finance at the FCA.

Further reading: FCA to deliver VRP, Open Finance in 2025 to ‘support growth’ in the UK