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Britain’s financial markets regulatory authority set to introduce a dedicated service for overseeing payment systems by April 2015
The Financial Conduct Authority (FCA), Britain’s official regulatory authority charged with the oversight of business ethics and consumer protection within the financial services industry has today announced that it intends to create an entirely new regulatory body for the specific purpose of regulating payment systems which operate within the United Kingdom.
The FCA, which superseded the Financial Services Act in 2013 after 28 years in existance, cites the need to open the market to new entrants in order to improve competition within the payment systems segment as being a driving factor toward establishing a dedicated regulatory body for that specific purpose.
Whilst demonstrating such a degree of willngness to open the door for competitive opportunities among payment providers, the FCA recently took a draconian stance on introducing brokers, by tightening its rules relating to how they promote their services, as reported exclusively by LeapRate in January.
According to the FCA’s official announcemnt on the matter, electronic payment systems process over 7 billion transactions annually, worth over £75 trillion, and in ensuring that the focus of the new regulator’s work is shaped in an effective manner, the FCA’s “call for inputs” will be invoked, to which responses should be sent before April 15 this year.
Martin Wheatley, FCA Chief Executive Martin Wheatley said today that “This sector is critical to the economy so it must reflect the needs of people and firms and enjoy their confidence.”
“We need to know if the sector is as open as it should be to new entrants into the market and are consumers getting the best possible deal?”
Competition will be high on the agenda of the new regulator. The largest payment systems are owned and managed by the big banks, but concerns have been raised that the sector lacks transparency and innovation. It also needs to be easier for challenger banks to access these systems and compete with the bigger players.
The Banking Reform Act (2013) created a new independent regulator for payment systems as a subsidiary of the FCA, with the new regulator set to be fully operational by April 1, 2015.
There are three objectives which have been set forth by the FCA in the time precedent to establishing the new payment systems regulator, which are the ability to promote competition, the promotion of innovation and a methodology which ensures that payment systems operate in the interests of their users.
With a number of payment systems in use currently in the UK, HM Treasury will consult on which payment systems will be overseen by the new regulator later this year.