The UK Government has announced plans to integrate the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA) as part of its ‘Plan for Change.’ The decision is aimed at creating a more streamlined regulatory framework, reducing duplication of responsibilities, and fostering innovation within the payments sector. The move is expected to ensure a more predictable and efficient approach to regulation while maintaining robust consumer protections.
The Government’s announcement
The announcement was made on 12 March 2025 by the Economic Secretary to the Treasury, who outlined the Government’s vision for a more efficient regulatory landscape. According to the Government, the consolidation of the PSR into the FCA will help reduce compliance burdens on businesses, promote competition, and enhance security within the payments industry. By placing payments regulation under the FCA’s broader financial oversight, the Government aims to create a regulatory system that better supports the evolving payments ecosystem in the UK.
The consultation process
As part of this transition, the Government will initiate a consultation process over the summer to gather input from industry stakeholders. This consultation will be crucial in shaping the final structure of the new regulatory approach. Once the consultation process is completed, legislation will be introduced to formalise the merger. Until the new regulatory framework is established, the PSR will continue to operate with its current statutory powers and oversee its ongoing work programme.
During the interim period, the PSR and FCA will work closely together to facilitate a smooth transition. The recent appointment of a joint PSR/FCA Payments Executive Director is expected to help align the two regulatory bodies and ensure that businesses experience minimal disruption as the consolidation progresses.
Next steps
The Government has stated that this announcement does not result in any immediate changes to the PSR’s remit or its ongoing work programme. The PSR will continue to operate with its existing statutory powers until legislation is passed to enact the merger. In the meantime, the PSR and FCA will take steps to coordinate their activities more closely, ensuring a seamless transition once the new regulatory framework is in place.
