Today, we’re thrilled to sit down with Priya Jaiswal, a distinguished expert in Banking, Business, and Finance, known for her deep insights into market analysis, portfolio management, and international business trends. With her extensive background, Priya is the perfect person to help us unpack the UK government’s recent proposal to integrate the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA). In this conversation, we’ll explore the motivations behind this potential merger, its implications for the regulatory landscape, the benefits for businesses and consumers, and how it aligns with the UK’s ambition to lead in payments innovation. Let’s dive into this fascinating development in financial oversight.
What inspired the UK government to propose merging the PSR into the FCA, and what are the core objectives of this plan?
The primary inspiration behind this merger is the desire to streamline the oversight of payment systems in the UK. The government wants to reduce complexity in the regulatory environment, which currently involves multiple bodies overseeing the same sector. By folding the PSR into the FCA, the aim is to create a single, unified authority that can oversee competition, innovation, and consumer protection in payment systems more effectively. The core objectives are to simplify the regulatory framework for firms, making it easier for them to navigate compliance, and to enhance the overall experience for businesses and consumers through more consistent and efficient oversight.
How do you see this consolidation reshaping the regulatory landscape for companies in the payments sector?
This consolidation could be a game-changer for the payments sector. Reducing the number of supervisory bodies means companies won’t have to deal with overlapping or conflicting guidance from different regulators. It’s likely to create a more cohesive regulatory environment where firms can focus on innovation rather than getting bogged down by bureaucratic red tape. Over time, this could lower compliance costs and make the UK a more attractive place for payments businesses to operate, especially for startups and international firms looking for a stable and streamlined regulatory setup.
Can you share some insights on how the FCA and PSR have collaborated in the past, and what that tells us about the potential success of this merger?
The FCA and PSR have already built a strong foundation of collaboration, particularly in areas like open banking standards. They’ve worked together to develop frameworks that promote competition while ensuring consumer protection, which has helped reduce some of the regulatory burden on firms. For instance, their joint efforts on open banking have allowed for smoother data sharing between financial institutions, benefiting both innovation and customer experience. This track record suggests that a full merger could build on these successes, creating a more integrated approach without losing the specialized focus on payments that the PSR brings to the table.
What do you think are the biggest advantages of having a single regulatory authority oversee the payments industry?
One of the biggest advantages is efficiency. A single authority like the FCA, with the PSR’s functions integrated, can make quicker decisions without the need for coordination between separate entities. This could lead to faster responses to market changes or emerging risks in the payments space. Additionally, it offers greater clarity for firms—having one set of rules and one point of contact simplifies compliance and reduces uncertainty. For businesses, this could translate into lower operational costs and more confidence to invest in new technologies or services.
The idea of a ‘clear, predictable, and proportionate’ regulatory framework has been highlighted in this proposal. How do you interpret this for the payments industry?
This phrase is crucial for understanding the government’s vision. ‘Clear’ means that firms will have well-defined rules and expectations, so they know exactly what’s required of them. ‘Predictable’ ensures that regulatory decisions won’t come as a surprise—businesses, especially those innovating in payments, need stability to plan long-term strategies. ‘Proportionate’ is about balance; it suggests that regulation will be tailored to the size and risk profile of firms, so smaller players aren’t crushed by overly burdensome rules while larger ones are still held accountable. Together, this framework aims to foster growth while maintaining trust in the system.
How does this merger align with the UK’s broader ambition to be a global leader in payments innovation?
The UK has set its sights on becoming a hub for payments innovation, and this merger is a strategic step in that direction. By simplifying the regulatory structure, it addresses one of the key barriers to innovation—complex and fragmented oversight. A streamlined system can make it easier for fintechs and other innovators to test new ideas without fear of regulatory missteps. Moreover, a single, well-respected authority like the FCA could enhance the UK’s reputation as a safe and attractive destination for investment and talent in the payments sector, drawing in global players who want to be part of a cutting-edge ecosystem.
What can you tell us about the timeline for this proposed change and the steps ahead for stakeholders?
The government has announced plans to introduce legislation for this merger as soon as parliamentary time allows, following the consultation launched in March 2025. While exact dates aren’t set in stone, the consultation phase is critical for gathering input from industry stakeholders, consumer groups, and other interested parties. This feedback will shape the final legislation, and I expect there will be opportunities for firms to engage directly with policymakers to ensure their concerns are addressed. It’s a deliberate process, designed to balance speed with thoroughness, so we might see significant progress within the next couple of years.
Looking ahead, what is your forecast for the future of payments regulation in the UK if this merger goes through?
If this merger is executed well, I believe we’ll see a more dynamic and responsive regulatory environment for payments in the UK. The consolidation could set a precedent for how regulation can adapt to fast-evolving industries like fintech, balancing innovation with consumer protection. I anticipate a period of adjustment as firms get used to the new structure, but over the long term, I expect this to strengthen the UK’s position as a global leader in payments. We might also see other countries looking at similar models to streamline their own regulatory frameworks, inspired by the UK’s approach.
