Government to merge financial regulators
Prime Minister Sir Keir Starmer has announced plans to abolish the and transfer its responsibilities to the Financial Conduct Authority (FCA), aiming to simplify regulation and drive economic growth by eliminating redundancies
The PSR was originally created to enhance competition and innovation in payment systems but has come under scrutiny for decisions such as the mandatory refund system for payment fraud. The government believes merging the PSR with the FCA will create a more efficient regulatory framework, reducing administrative burdens on businesses and ensuring clearer oversight.
The move will require primary legislation, meaning the transition could take time and introduce short-term disruptions. Some industry experts have expressed scepticism about the necessity of the change, arguing that the PSR and FCA already work closely together.
A financial analyst familiar with the regulatory framework said “The PSR has played a vital role in fostering competition and protecting consumers but this merger could risk diluting its focus. While streamlining oversight can be beneficial, the industry needs clarity on how the FCA will handle payment system regulation going forward.”
The government maintains that the merger will enhance efficiency while continuing to protect consumers and maintain a competitive financial sector. The details of the transition are expected to be outlined in upcoming legislation, with further consultations anticipated before the process begins.