Willem Wellinghoff, Chief Compliance Officer and UK Chair of Ecommpay, has set out concerns about the proposed changes to UK payment systems regulation as the industry consultation period comes to a close.
Wellinghoff expressed support for the government’s intention to refine regulation around the payments ecosystem in the UK, aligning with the goals of the National Payments Vision. He indicated that while the sentiment towards simplification is welcomed, there may be unaddressed complexities in the approach.
He stated, “Ecommpay feels immensely positive that the UK government is committed to streamlining regulation for the payments ecosystem and we support the National Payments Vision. However, with the consultation on payment systems regulation closing last month, we are concerned that there will be an over-simplification of the task.”
Supervision clarity
According to Wellinghoff, the regulatory frameworks overseen by the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) presently serve distinct purposes within the ecosystem. The FCA’s focus is on consumer protection and market integrity, whereas the PSR is tasked with ensuring payment systems operate efficiently and foster sector innovation.
“The industry does certainly recognise the challenge the FCA and the PSR have to remain focused on their foundational duties, alongside fostering growth and innovation. Whilst we see significantly more positive collaboration with industry, critically it is vital that there is no misunderstanding that the duties of the PSR and FCA must be carefully aligned and adapted to ensure they meet industry and societal needs. All the signals currently are that the FCA will become a super-regulator covering all areas.”
Ahead of any regulatory change, concerns have been raised within the industry that unifying or overly simplifying these functions risks undermining the intended benefits of the system.
Wellinghoff warned, “The fact of the matter is that the FCA and PSR focus on different things. One is a conduct regulator securing protection for consumers and ensuring market integrity. The other is a payment systems regulator focusing on ensuring the systems work effectively and drive innovation. Merging the two functions could result in neither task being properly delivered, particularly as the recent FCA & Practitioner Panel Survey showed some key areas for improvement. Naturally, we all hope that the right balance and approach can be achieved, but a short-term quick-fix solution is not advisable. A more gradual, proportionate approach is needed.”
Industry perspectives
The Payments Association has also voiced warnings, noting the possibility that reforms could hinder efforts to modernise and reform the payment sector in the UK.
According to Wellinghoff, “As the Payments Association has recently identified, the plans for a post-PSR landscape ‘risk jeopardising UK payments reform’. It is essential, therefore, that clear delineation of the roles of the FCA and the Bank of England are established for proper regulatory oversight.”