The UK government has announced plans to dissolve the Payment Systems Regulator (PSR) and merge its functions with the Financial Conduct Authority (FCA).
According to The Financial Times, this move is part of an initiative to streamline regulatory processes, reduce overlap, and eliminate redundancies within the country’s financial sector. The merger is expected to enhance the regulatory framework, promoting a more agile and innovative environment for investment and growth.
The decision to consolidate the PSR into the FCA comes as the government aims to simplify the existing complex regulatory landscape, which has been criticized for stymieing economic expansion. “For too long, the previous government hid behind regulators — deferring decisions and allowing regulations to bloat and block meaningful growth in this country,” was stated during the announcement. The integration of the PSR, which operates with a budget of £28m for the current financial year and shares resources with the FCA, is set to proceed after necessary legislation is passed.
Despite the strategic rationale, the effectiveness and timing of the merger raise concerns among some officials and experts. Notably, the PSR and FCA already share facilities and senior staff, which blurs the lines of their distinct operations. Critics like Charles Randell, former FCA chair, caution against potential operational disruptions, arguing that the reorganisation might lead to a period of reduced productivity, ultimately resulting in minimal change in duties albeit under a different banner.
The consolidation is part of a wider review directed by the government to assess and possibly reduce the number of regulatory bodies, although no further reductions have been specified yet. This review aims to identify opportunities for further cuts to streamline operations and is reportedly more challenging than initially anticipated.
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