In a bold move to streamline regulatory oversight and spur economic growth, the UK government is actively considering the abolition of the Payment Systems Regulator (PSR) as part of a comprehensive review of economic regulators.
According to Sky News, this decision, expected to be finalized within weeks, is driven by the leadership of Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves, who are advocating for a reduction in bureaucratic red tape to boost the economy.
The PSR, which oversees the UK’s payment systems and is directly accountable to Parliament, was established under the Financial Services (Banking Reform) Act 2013 and has been operational since 2015. Despite its role in a sector increasingly influenced by technology, the regulator has faced criticism from both the industry and politicians for its approach, particularly regarding fraud reimbursement practices by financial firms.
The potential merger of the PSR into the Financial Conduct Authority (FCA) aligns with the government’s broader agenda to reassess the effectiveness and necessity of regulatory bodies in fostering economic growth. This agenda gained momentum last month following the replacement of Marcus Bokkerink, the chairman of the Competition and Markets Authority (CMA), with Doug Gurr, a former Amazon executive, reflecting a push towards enhancing UK competitiveness.
Additionally, the government’s scrutiny extends beyond the PSR. In a Christmas Eve directive, the Prime Minister and Chancellor challenged major regulators, including Ofcom and Ofgem, to propose strategies for cutting bureaucracy. This was followed by a series of roundtable discussions led by Ms. Reeves to gather insights on proactive growth measures.
The review of the PSR and other regulatory bodies comes at a crucial time when the role of such entities is increasingly questioned in the context of a rapidly evolving global payments landscape. As stated by a government source, “No other major economy has a standalone payments regulator like this, and it is hard to make the case for it continuing to exist.”
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