The Payment Systems Regulator (PSR) will become fully operational in April 2015. The PSR is a subsidiary of the FCA, but it is an independent economic regulator, with its own objectives and governance.

HM Treasury will designate the systems that the PSR will regulate. These will be the largest and most important payment systems which, if they were to fail or to be disrupted, would cause serious consequences for their users. HM Treasury issued its consultation on designation on 14 October 2014. It has proposed designating the main interbank payment systems, namely Bacs, CHAPS, Faster Payments Service (FPS), LINK, Cheque and Credit Clearing and Northern Ireland Cheque Clearing and the two largest card payment systems in the UK, MasterCard and Visa. HM Treasury is expected to reach its decision in advance of the PSR’s operational launch.

The PSR has issued Consultation Paper 14/1: A new regulatory framework for payment systems in the UK (PSR CP14/1). In PSR CP14/1 the PSR sets out the regulatory framework and policies that it proposes to adopt in time for its full operational launch.

The PSR’s policy proposals include:

  • setting up a new Payments Strategy Forum with broad representation from the industry and service users;
  • launching a market review into the ownership and competitiveness of infrastructure provision commencing by April 2015;
  • opening up the governance and control of payment systems by involving additional players in more transparent decision making. This includes all payment system operators (Operators) being required to ensure that service-users are appropriately represented in decision making;
  • that Operators must have objective, risk-based, and publicly disclosed access requirements which permit fair and open access;
  • the PSR engaging with relevant authorities on the proposed EU Interchange Regulation; and
  • introducing principles on the PSR’s expectations of industry behaviour. Industry will work with the PSR on a ‘no surprises’ basis, discussing significant developments in advance and on an ongoing basis.

The deadline for comments on PSR CP14/1 is 12 January 2015. The PSR expects to publish its final policies by the end of March 2015.

View A new regulatory framework for payment systems in the UK, 13 November 2014