Getting ready to say goodbye to the PSR
25 September 2025
Earlier this year, the UK Government announced its intention to abolish the Payment Systems Regulator (PSR) and consolidate the PSR's primary functions into the Financial Conduct Authority (FCA), to streamline the regulatory environment and boost growth as part of its Regulatory Action Plan. This means gearing up the FCA to be the UK's port of call for regulating UK payment systems, including promoting competition and innovation and supporting the interests of consumers and businesses in this space, alongside the Bank of England, which will continue to supervise certain payment systems for prudential and risk management purposes.
This month, HM Treasury launched its open consultation setting out the proposals for the move, covering the roles and responsibilities of the two regulators, regulatory objectives and powers and other features of the new framework. Key points to note:
The proposed policy approach is to integrate the PSR's functions within the FCA's current framework in the Financial Services and Markets Act 2000 (FSMA 2000) where practicable, and where it is not, the relevant functions are likely to be set out in a new part of FSMA 2000.
The consultation flags that no new categories of persons would be brought in scope of the payment systems regulation, nor would any new regulated activity be created in connection with these, as a result of the proposed policy approach.
The FCA will continue to regulate banks, e-money institutions, payment institutions and account information services providers under payment services and e-money legislation.
On the same day as the launch, David Geale, FCA Executive Director for Payments and Digital Finance and PSR Managing Director, noted that the consultation is "an important next step in simplifying and clarifying payments regulation", with the consolidation ensuring there is a "clear, predictable and proportionate regulatory framework" to support the UK's payments landscape.
Ahead of handing of the reins, the FCA and PSR are already further streamlining their approaches to payments regulation, including through the creation of the FCA Executive Director role for Payments and Digital Finance, working with the Bank of England and HM Treasury to drive the delivery of the UK Government's National Payments Vision and jointly driving forward work on Open Banking.
Authors: Fiona Ghosh, Partner; Max Savoie, Partner; Saba Nasrolahi, Solicitor
