Aniket Pujari(Bloomberg) — The UK government is abolishing the Payment Systems Regulator as part of its attempts to cut “unnecessary regulation” and stoke economic growth.
The work of the PSR, such as payment fraud and open banking policies, will be folded into the Financial Conduct Authority, the government said in a statement Tuesday.
The PSR, which is already an independent subsidiary of the FCA and funded by industry fees, will continue to operate until legislation is passed. The agency had 148 staff and operating costs of almost £23 million ($30 million) in the year through March 2024, according to its latest annual report.
“For too long, the previous government hid behind regulators – deferring decisions and allowing regulations to bloat and block meaningful growth in this country,” Prime Minister Keir Starmer said.
Starmer and Chancellor Rachel Reeves have used much of their first year in office to declare that the crackdown on the finance industry since the 2008 crisis has gone too far as they’ve looked to deregulate their way to growth. It’s been a sharp reversal for Labour, which for decades was the political party that favored taming the City of London.
The PSR’s sweeping changes to fraud reimbursements last year put it on a collision course with financial firms, which lobbied successfully to cut the maximum refund to £85,000 ($110,020). The regulator had initially wanted the ceiling set at £415,000.
The payments industry has also complained key systems for the new compensation rules were not ready, Bloomberg previously reported, and have raised concerns about needing to engage with three different regulators.
“The regulatory system has become burdensome to the point of choking off innovation, investment and growth,” Reeves said in a statement. She has made several public calls for regulators to “tear down” barriers in recent months, amid a poor outlook for the British economy.
The PSR’s interim managing director David Geale and chair Aidene Walsh are due to give evidence to lawmakers on the Treasury Committee on Wednesday. Geale is also an executive at the FCA.
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