In 2015 and 2016 the Payment Systems Regulator (PSR) conducted a market review of ownership and competition in the provision of infrastructure services for the three interbank payment systems – Bacs, FPS and LINK. In July 2016 the PSR published its final report on the market review stating that it had found no effective competition in this market and set out some initial thoughts on a package of remedies to address this. The PSR also stated that it would develop its thinking on the potential remedies and consult on them.
The PSR has now published a consultation paper on proposed remedies. In the light of its findings, the PSR is consulting on two remedies:
- competitive procurement of future central infrastructure contracts; and
- messaging standards.
In the consultation, the PSR assesses the effectiveness and proportionality of each of the above remedies and the package as a whole. The PSR first considers, for each remedy, which of the options it has identified would be effective in resolving a problem. Then its considers the cost of each effective remedy option in order to identify the east-costly effective remedy. Finally, the PSR considers the effectiveness and proportionality of the package of remedies as a whole, including an assessment of the expected costs and benefits.
The consultation is accompanied by annex 1 and 2 which set out case studies on competitive procurement and the PSR’s estimate of the size of negative effects to users, and annex 3 which sets out the draft directions.
The deadline for comments on the consultation paper is 1 February 2017. The PSR expects to publish its final decision on the remedies in spring 2017 and, if appropriate, issue remedies.
View PSR moves towards wholesale change of payments infrastructure, 7 December 2016