On 3 February 2025, the Financial Conduct Authority (FCA) published a portfolio letter to payments firms, setting out its priorities for supervision and its expectations of those firms.

The letter applies to firms authorised or registered under the Payment Services Regulations 2017 and the Electronic Money Regulations 2011, such as payment institutions, electronic money institutions, and registered account information service providers.

The FCA welcomes the Government’s approach set out in its National Payments Vision, noting that it is consistent with its objectives, and confirming that it will fulfil the function of the UK regulator for Open Banking, engaging closely with the Payment Systems Regulator (PSR) on payment system issues and managing any overlap between them, including on fraud.

Key outcomes

The letter acknowledges that firms have made improvements since the FCA’s previous portfolio letter in March 2023, but flags that there is still more for firms to do and that the FCA remains concerned that there are still risks of harm to consumers and financial system integrity. To address these, the letter sets out three key outcomes for firms, which the FCA believes are essential to good consumer outcomes:

  • Effective competition and innovation to meet customers’ needs, characteristics and objectives – the FCA’s priorities here relate to innovation and to the Consumer Duty.
  • Firms do not compromise financial system integrity – areas of priority highlighted in relation to this key outcome are financial crime and operational resilience.
  • Firms keep customers’ money safe – priorities here include safeguarding, prudential risk and wind-down planning.

In the letter, the FCA also outlines the importance of governance, oversight and leadership in helping to achieve the outcomes, and sets out steps that CEOs should be taking to ensure their firms are meeting the FCA’s expectations in relation to this.

FCA priorities

The FCA highlights some of its policy priorities, which include:

  • Open Banking: The FCA confirms that it is already working “at pace” to progress Open Banking, including continuing its focus on the development of the Future Entity, the prevention of fraud, consumer protection, work on premium application programming interfaces and the development of the long-term regulatory framework (which will be expanded over time to cover new Open Finance use cases).
  • Strong Customer Authentication (SCA): In light of the Government’s commitment to revoking the payments authentication elements of SCA, the FCA plans to engage throughout 2025 with industry, consumer organisations, and other stakeholders on its approach to replacing the SCA, including on the contactless limits.

Next steps

CEOs are expected to discuss the letter with their Boards and to take the necessary steps to deliver on the outcomes set out. The FCA plans to engage with firms to ensure this has happened.