On 21 April 2026, HM Treasury (HMT) published its consultation response in relation to proposals to take a streamlined approach to payment systems regulation.

Background

In September 2025, HMT published its ‘A Streamlined Approach to Payment Systems Regulation’ consultation, seeking views on proposals to abolish the Payment Systems Regulator (PSR) and transfer its functions to the Financial Conduct Authority (FCA).

The proposals would see the FCA take on the PSR’s responsibilities, including for promoting competition and innovation in payment systems and the services provided by payment systems, as well as supporting the interests of consumers and businesses who make payments every day.

Summary

HMT’s response to the consultation feedback includes:

  • Roles and responsibilities of the regulators: HMT intends to proceed with consolidating the PSR’s functions entirely within the FCA and notes that responses were generally in favour of achieving this outcome by seeking to integrate the PSR’s functions within the FCA’s pre-existing legal framework under the Financial Services and Markets Act 2000 (FSMA). However, HMT also set out that it is considering different options for the design of the legislation to deliver its intended policy outcome and will reflect on the feedback it has received on the preferred legislative approach to inform its decisions on the final design.
  • Regulatory objectives: HMT intends to proceed with maintaining the substance of the PSR’s objectives, ensuring the FCA is responsible for promoting competition, innovation and the interests of service-users when regulating payment systems. However, it is considering different options for the design, including the application of the FCA’s strategic objective and secondary international competitiveness and growth objective.
  • Regulatory powers: HMT intends to proceed with providing the FCA with powers in relation to payment systems that are broadly equivalent in scope and substance to those exercisable by the PSR. However, HMT also acknowledges the points made by some respondents on direction-making and rulemaking powers and HMT will consider this further when designing the legislation. In addition, HMT sets out that it intends to simplify the framework for appealing decisions made by the regulator to reduce the complexity for industry.
  • Other features of the new framework: In relation to definitions of key terms, as a general principle, HMT intends to replicate the pre-existing definitions, to the extent those are suitable within the new design. This includes keeping ‘infrastructure providers’ within scope of the definition of ‘participants’ in a payment system. In relation to oversight and accountability, in line with the generally supportive feedback from respondents, HMT intends to proceed with applying an oversight and accountability framework to the FCA when it is acting in relation to payment systems that replicates the substance of the framework currently in place for the PSR.

Next steps

HMT highlights that consolidating the PSR into the FCA will require primary legislation and that it will provide further details in due course on its plans for bringing forward legislation as soon as Parliamentary time allows.

Ahead of this, HMT sets out that the PSR and the FCA are taking steps to enhance how they coordinate and ensure operational readiness for implementing the integration and will continue to take these steps in the intervening period prior to legislation being enacted.