On 30 January 2025, the Payment Systems Regulator (PSR) issued a statement of policy which explains its approach to cost benefit analysis (CBA) and how the CBA framework helps it develop policies with a positive impact.

Background

In February 2024, in anticipation of the formation of the CBA Panel, the PSR published its draft CBA framework, for transparency. At the time, the PSR stated that the document would act as the basis for a draft statement of policy. Publishing a statement of policy on the PSR’s approach to CBAs was made mandatory by the Financial Services and Markets Act 2023, which amended the Financial Services (Banking Reform) Act 2013 (FSBRA). As required by section 104G(1)(b) of FSBRA, the PSR consulted the CBA Panel as part of preparing the draft statement, which was published in September 2024. The Policy Statement now published (PS25/1) contains the PSR’s statement of policy on CBA.

Statement of policy

The statement of policy sets out the broad framework within which the PSR assesses the impacts of its regulatory interventions, recognising the risks and uncertainty it inevitably faces. The PSR focuses on the direction and scale of the difference between benefits and costs of regulatory approaches, with the aim of promoting better outcomes for those using payments systems. It also explains why it uses CBA, when, how, and what CBA involves. Across all these dimensions, the PSR emphasises how crucial it is for CBAs to be a process embedded across the entire policy lifecycle.