The Labour government’s plan for a payments system revolution has fallen flat, a top trade body has warned, despite the Treasury’s promise of an “ambitious rethink” of regulatory structure.
Chancellor Rachel Reeves unveiled her National Payments Vision (NPV) in her 2024 Mansion House address where she said the plan would include “decisive action to progress opening banking and support our fintech businesses”.
But the Payments Association – which serves as the industry body for the payment sector – has said the moves constitute more of a “reshuffle than a reform”.
Labour’s deregulation plans have spearheaded growth prospects over the last year.
The Payment Systems Regulator (PSR), which was regulated into existence in 2013, was abolished in March as part of Labour’s plan to drive growth.
Reeves said the move would “free businesses” from the “stranglehold” of burdensome regulation.
Riccardo Tordera-Ricchi, director of policy and government relations at the Payments Association, said while the move to axe the PSR was welcome the changes risk resulting in “the same problems under a different roof”.
Downing Street said the PSR would “mainly be consolidated” into the Financial Conduct Authority (FCA).
Payments industry calls for regulatory clarity
The Payments Association sounded the alarm on the relationship with the FCA and Bank of England and called for the government to ensure the bank has veto rights over the City watchdog.
Tordera-Ricchi said the industry had “ambiguity around the respective roles and responsibilities of the FCA and the Bank of England” and called “for these to be clearly defined and communicated”.
“Concerns remain about who will have clear responsibility for competition oversight in the payments market,” he added.
The body called for clearer mechanisms to critique the financial watchdog’s streamlining of regulation.
This included demands for a “robust” post-implementation review after 12 months where the industry would check if the new framework delivers on promised benefits of growth, clarity and reduced burden.
Business Secretary Peter Kyle has promised to cut regulatory burdens by 25 per cent after stating there was “absurdities” across different watchdogs.