(Bloomberg) — The head of the soon-to-be axed Payment Systems Regulator conceded that his organization was a “reasonably easy target” as the UK government hunts for ways to slash red tape.
Prime Minister Keir Starmer announced on Tuesday the UK will fold the PSR into the Financial Conduct Authority. David Geale, the PSR’s interim managing director, said he had become aware the agency could be on the chopping block around late January, when the Chancellor of the Exchequer Rachel Reeves made it clear the Treasury was pursuing a deregulation agenda in her push for growth.
That was because the PSR was already using many of the FCA’s systems, operating from the same building, and had staff on the same payroll, Geale told a panel of lawmakers. The PSR, which was already an independent subsidiary of the FCA and funded by industry fees, will continue to operate until legislation is passed.
“We see it as a pragmatic next step to decongest some of that regulatory congestion that we have today,” Aidene Walsh, the chair of the PSR, told the lawmakers on the same panel. “There is a lot of feedback at this point of time around duplication, around how things can be streamlined.”
The government’s move this week came after the regulator’s sweeping changes to fraud reimbursements in recent months put it on a collision course with financial firms, who bitterly lobbied to water down those rules. Still, it marked a stark turnaround from last year, when the watchdog worked with the government to develop its so-called National Payments Vision, which encompasses the UK’s ambitions in the industry.
“The regulatory system has become burdensome to the point of choking off innovation, investment and growth,” Reeves said in a statement this week.
The PSR has separately faced pushback from European lawmakers as it considers a cap on how much British merchants must pay in credit-card fees on online purchases made by consumers from the continent of Europe.
Members of the European Parliament have asked the UK to conduct a full economic study prior to introducing any such cap fearing their banks could lose on revenue and warned of retaliation, Bloomberg reported previously.
Visa Inc. and Mastercard Inc., which set the fees on behalf of the banks, along with Revolut Ltd. have also pushed back against the cap and filed for a court to review the PSR’s decision on the matter, Geale confirmed to lawmakers, noting the agency will “robustly be defending that decision.”
“We disagree with the PSR’s assessment and believe it has acted beyond its statutory powers in imposing these caps,” a Revolut spokesperson said in a statement. “We have therefore requested the court to review, and ultimately overturn the PSR’s decision.”
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