Government considers merging Payment Systems Regulator with FCA

The government is considering abolishing the Payment Systems Regulator (PSR) and merging it into the FCA in a bid to reduce bureaucracy and stimulate economic growth.

According to Sky News, the government is "actively considering" a decision to scrap the body and a decision is expected to be made within weeks.

This move is part of a broader effort by Prime Minister Keir Starmer and Chancellor Rachel Reeves to streamline regulatory bodies, with concerns that some are hindering economic progress. This includes an audit of 130 regulators and replacing the Competition and Markets Authority (CMA) chairman.

Last month business secretary, Jonathan Reynolds, said: "We've got to genuinely ask ourselves the question: have we got the right number of regulators?"

Willem Wellinghoff, chief compliance officer and UK chair of inclusive payments platform, Ecommpay, commented: “With the FCA and PSR in the same building, and the PSR being a subsidiary of the FCA, it’s unsurprising that some might think the two organisations could be merged. Whilst there is definitely scope for improvement on how the PSR interacts with the industry, the Bank of England and the FCA, the PRA and FCA have fundamentally very different purposes and objectives. And combining the two organisations could potentially negatively impact the FCA, which is already stressed as a regulator.

“From our point of view the role of the PSR could actually be strengthened by incorporating the whole regulation of the payments market – not just systems - under one roof, thereby being a specialist regulator for the entire UK payments ecosystem. This could, potentially, alleviate pressure on the FCA and the Bank of England and drive innovation.”