The FCA has published a speech given by Hannah Nixon, managing director of the Payment Systems Regulator (PSR). The speech is entitled Payment systems: the regulatory challenge.

At the beginning of her speech Mrs Nixon provides a quick recap on the PSR noting that its objectives underpins everything it does. These objectives are to:

  • promote effective competition in the interest of service users;
  • promote the development of innovation in the interest of service users; and
  • ensure that payment systems are operated and developed in a way that considers and promotes the interests of service-users.

She also notes that HM Treasury is currently consulting on which payment systems the PSR will regulate and a final decision is expected soon.

Mrs Nixon then discusses three core areas that the PSR believes should be improved. These are:

  • the industry strategy process. Mrs Nixon states that industry has collaborated well in some respects but that a number of other infrastructure-related themes have suffered through a lack of coherent approach. To address this the PSR will be launching a new Industry Strategy Forum. The Forum will develop and agree strategic priorities for the long-term development of payment systems in the UK;
  • ownership, governance and control of payment systems. Mrs Nixon states that concerns have been raised regarding the ownership, governance and control of payment systems. The PSR is therefore planning to change the way these systems are controlled and how decisions are made. Mrs Nixon also mentions that there will be requirements that protect against individuals being both simultaneously a director of an interbank operator and of a central infrastructure provider to a payment system. She adds that board minutes and votes will have to be published and operators will also have to report to the PSR annually to show how they have complied with its directions; and
  • access to systems. Mrs Nixon states that the PSR is proposing to introduce a package that includes an access rule and a reporting rule. The PSR is also proposing a regulator-approved industry Code of Conduct governing arrangements for indirect access provided by sponsor banks. In Q1 2015 the PSR will be conducting a market review into the sponsor market for access in order to understand why so few banks that directly access payment systems offer sponsored access.

In the final part of her speech Mrs Nixon mentions that the PSR will be working with HM Treasury, the FCA and Bank of England to ensure that it has a vocal role in Europe. She states that a Regulation on interchange fees is expected next year.

View Payment systems: the regulatory challenge, 8 December 2014