We are at a time of fundamental change for the regulatory payments landscape in the UK. As new types of products and services emerge, the government believes that now is the right time to explore reforms to payments regulation and the systemic payments perimeter. There is now a huge range of different types of firms involved in the UK payments chain – one that has lengthened, unbundled, and changed beyond recognition from a few years ago.

This means more complexity. More needs to be done between the UK’s regulators to think about how best to supervise such entities in a proportionate and transparent way, and for regulators to provide greater clarity, coordination, and reflection on their statutory objectives.

New players emerging

With new players expected to emerge as significant entities in the payment ecosystem (some already have), there are presently considerations and consultations regarding the Bank of England (BoE) and whether it should have increasing responsibilities for overseeing new systemic players in the payments chain. The BoE already supervises financial market infrastructures (FMIs), like they do with payment systems, because they are a vital part of the UK’s financial system and its wider economy.

It is important that HM Treasury (HMT) and regulators ensure that the UK prioritises a focus on elements that would attract investment and encourage international competitiveness so the UK can build an attractive and robust future regulatory framework. This is vital to ensuring that the UK continues to foster world leading products and services which will be critical to how consumers interact with banks and financial services providers.

Regulator roles and responsibilities recalibration

As the payments landscape continues to evolve, the recalibration of the roles and responsibilities of regulators is needed and the assessment of this from HMT is welcomed. However, we encourage that this is done on a deeper basis consistent with the wider Future Regulatory Framework (FRF). It is of key importance that the consumer protection and competition implications of such changes are also considered by ensuring the right statutory objectives are in place for the regulators.

A key industry concern and ask is for there to be robust communication from the regulators to paint a clear picture about each supervisory bodies’ priorities, responsibilities, and how they would interact with each other as firms cross over into different types of supervision as their roles blur. Given the level of innovation in the market, it is important that any expansion to the systemic perimeter does not undermine the UK’s pro-innovation regulatory environment and the long running policy which has fostered the UK’s world leading payments environment.

It is welcomed that HM Treasury and the Bank of England are aiming to scope regulation in line with their principle of ‘same risk, same regulatory outcome’. However, more needs to be done to convince industry that this approach can be achieved by measures proposed by government. If legislators and regulators are successful, the UK could see a payments system that allows for the ease of improvements to our payments infrastructure, and the introduction of new products which would allow for the continuing enhancement of the consumer experience when making a transaction.