Payments watchdog to remain until 2027

The head of the Payment Systems Regulator (PSR) does not foresee the regulator being officially abolished before the first quarter of 2027, amid growing criticism regarding the slow pace of sector reforms.

David Geale, Managing Director at the PSR, informed the Treasury Committee that he has not yet seen the outcome of the Treasury’s consultation on the payments regulator and is unaware of the precise timing of the legislation required to dissolve the body.

Geale remarked, “I am anticipating it’s not going to be any earlier than the first quarter of next year.” This statement follows the announcement by Sir Keir Starmer and Rachel Reeves last year regarding the PSR’s abolition, which was promoted as a significant policy aimed at fostering economic growth and reducing “unnecessary regulation.”

Subsequently, the Chancellor unveiled the government’s National Payments Vision (NPV) to revamp the sector. At a recent London conference, Geale indicated that the government plans to release the Payments Forward Plan within the next few months, which is expected to outline initiatives for the NPV.

When questioned about any “practical difference” since the announcement of the PSR’s consolidation into the Financial Conduct Authority (FCA), Geale noted that staff were “largely doing the same thing.” He expressed that further integration into the FCA might lead to some efficiencies.

Geale highlighted that some efficiencies have already been achieved by not replacing senior colleagues who have left the regulator. The PSR’s budget for the year stands at £28 million, which they expect to come “reasonably under.”

At the City and Financial Global’s Payments Regulation and Innovation Summit, Natalie Lewis, chair and head of payments at Travers Smith, praised recent regulatory progress but noted the industry is still “waiting for the coin to drop.” The Payments Association, representing the sector, previously described the current progress as more of a “reshuffle than a reform.”