The new Payments Systems regulator has vowed to revolutionise the £75 trillion payments industry to force a higher level of transparency and competition once it comes into power in April 2015.
Payment systems enable people to spend and transfer money. They underpin the UK’s everyday financial activity, but the industry is lacking the transparency and space for innovation needed for a truly competitive market, said Hannah Nixon, managing director of the PSR.
“The systems we have today have been developed incrementally over time by the major banks,” Nixon said. “So while they are relatively resilient, they are often treated as back office functions. Competition is limited, decision making opaque, and this is stifling innovation.”
“I want to see an industry that is responsive to, and focused on, the needs of those using payment services,” she added. “This will be an industry that encourages and enables competition and innovation, provides value for money, while maintaining reliability and security.”
Banking customers, and therefore the PSR, want banks to make it easier to switch accounts or lenders while keeping the same account number.
Where firms fall short of its expectations, the PSR will have the power to carry out enforcement investigations, issue penalties and censures, and compel them to take remedial action. The PSR will also handle commercial disputes regarding access to payment systems or fees and charges relating to services provided by them.
It also has the power to force a firm to sell its interests in an operator.
The PSR will regulate the largest and most important payment systems which, if they were to fail or be disrupted, would cause serious consequences to their users.
So far, HM Treasury has proposed regulations of the main interbank payment systems: Bacs, CHAPS, Faster Payments, LINK, Cheque and Credit Clearing, Northern Ireland Cheque Clearing, and the two largest card systems in the UK, MasterCard and Visa.
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