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In March 2013 the government published a consultation, Opening up UK payments, which proposed a new, competition-focused, utility-style regulator for retail payment systems in the UK.
The government was concerned about the market for UK payment systems, which was stifling competition and innovation, and not always serving the consumer properly.
The consultation presented a set of questions identifying the key issues on which the government sought views. The government is introducing amendments to the Financial Services (Banking Reform) Bill to establish the new Payment Systems Regulator under the FCA.
In July 2011 the Treasury Select Committee (TSC) published The future of cheques, its final report into the decision by the Payments Council – ultimately reversed – to set a target date of 2018 for the abolition of cheques. One of the TSC’s key recommendations was that the Treasury should bring the Payments Council formally within the system for financial regulation. The government accepted the TSCs recommendations, and as a result in July 2012 issued a consultation, Setting the strategy for UK payments (“Setting the Strategy”), setting out options for improving the way that payments strategy is made in the UK.
In Setting the Strategy, the government said that its favoured approach was the introduction of a new public body, the Payments Strategy Board (PSB), to set strategy across the UK payments industry. Since the publication of that document, however, a number of developments have occurred that have led the government to conclude that this option would not deliver its aims as set out in that document, and that these would be best achieved by pursuing an alternative approach of bringing payment systems under a new regime of economic regulation.
The government is now proposing to proceed with bringing payment systems under economic regulation, and establish a new competition-focused, utility-style regulator for retail payment systems. This consultation sets out the government’s response to the outcome of the previous consultation and its proposal for a new regulatory system, details how the government envisages the new regulatory regime functioning, and lists the consultation questions.
This consultation invites views on options for reforming the regulation and governance of payments systems in the UK. It should be read by those with an interest in the future development and strategy of payments systems and the users of those systems: this includes banks, building societies and other payments service providers, the owners and operators of payment systems, businesses, trade bodies, consumer groups and other interested parties.
Banking & Credit Team
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