The Government today launched a consultation setting out proposals for introducing a new system of competition-focused regulation for payment systems.
This forms part of the Government’s work to create a more competitive, consumer-focussed banking sector.
Strong new powers will be given to an existing regulator to ensure that challenger banks have the opportunity to compete on a level playing field with their larger competitors. This could include setting a fair price for big banks to charge for access to payments infrastructure.
The Financial Services Authority (FSA) and the Bank of England have also published the results of their review into barriers to new entrants to the banking sector today. This review, called for by the Government, announces significant changes to regulatory requirements and authorisation processes which, taken together, will reduce some of the regulatory barriers to entry into the banking sector.
The Chancellor, George Osborne, said:
Our banking system is too concentrated. We want new banks on our high streets offering real competition and challenging for better customer service. I am determined to deliver that.
The payment systems regulator will have the power to:
- Ensure access to the payment systems is on open, fair and transparent terms for all banks, including challengers and smaller players. This will include price-setting powers.
- Force the payment systems and their direct members to invest to deliver new innovations, bringing new services like mobile payments to customers.
- Ensure that consumer views are fully taken into account in decisions about payment systems, such as cheques.
- End the ownership of payment systems by the big banks, if necessary.
The regulator will be either the Financial Conduct Authority or one of the existing economic regulators, and will cover Bacs, CHAPs, Faster Payments, the cheque clearing companies, Link and the main card schemes (Visa, MasterCard, American Express), and their direct members (the big banks).