Financial Services Policy Explainer | Payment Services Regulations (PSR) Review and Call for Evidence
What is it?
Following HM Treasury’s Call for Evidence of its Payments Landscape Review in October 2021, the Government has called on stakeholders including digital technology suppliers to contribute evidence to the PSR’s main areas of growth following the Review, including crypto assets regulation and developments in Open Banking. The Review and Call for Evidence outline three areas of growth;
- Payments Regulation and the Systemic Perimeter
Following the Government’s Consultation in July 2022 examining reforms to how systemic payments entities are supervised by the Bank of England, rapid developments in technological capabilities including crypto assets, and regulatory oversights under the Retained EU Law Bill have led to considerable changes in payments regulation. As such, to prevent overlap, the Government is setting out its road map to formulate a singular regulatory regime, which it will publish later in 2023.
- Stablecoin and cryptoasset regulation
Following the Law Commission’s Digital Assets Consultation Paper, policymakers are at the early stages of implementing crypto assets into the financial regulatory regime. This means the Government’s Consultation will help to determine the Financial Services and Markets Bill’s (FSMB) approach to these assets. Interestingly, future decision-making will also affect traditional payment services and e-money institutions. The risks of not keeping up with a dynamic and evolving marketplace will be managed in large part by ensuring firms keep up with innovative approaches within digital assets.
- Open Banking
Following the joint-regulatory statement in December 2022 covering developments regarding the UK’s Joint Regulatory Oversight Committee (JROC), Open Banking, and its advancements in financial services will require expansions in prudential and authorisation regulations. Conversely, future policymaking must ensure market conditions facilitate innovation without unnecessary and economically damaging, and rigid regulation.
What does it mean for techUK members?
The UK’s highly innovative payments sector has been developed via digital technology suppliers’ abilities to operate without regulatory overreach, this approach must continue within future policymaking regimes. Through the Consultation’s major implications on future PSR policymaking, techUK will be offering its members to feed responses to the review.
Finally, it provides an opportunity to shape the future of the regulatory landscape for payments to help deliver upon the implementation of both Open Banking and Open Finance.