The role of the FCA and PSR in delivering the National Payments Vision

A payments system that works for everyone

Just before Christmas I was in Billericay for the opening of the 200th banking hub.

I got to chat to local people and business owners about the difference the hub will make to their everyday lives. It was great.

Although if I’m honest, the biggest talking point was probably the giant chocolate coins made specially for the occasion.

Roman coins. Medieval coins. Old two shilling pieces. All the size of dinner plates.

I think that’s the first time I’ve seen people genuinely happy to eat into their funds!

As educational – and tasty – as the coins were, banking hubs aren’t about nostalgia for cash.

They’re one part of making sure the UK payments system works for different people, different businesses, and different moments in life.

Sometimes that will mean cash, so it’s positive to see the acceleration in delivery of hubs.

That is alongside nearly 150 other cash solutions across the UK, and pledges from banks to maintain their networks - or even in some cases, to open new branches.

But other times it might mean cards, digital wallets, open banking, or even stablecoin and tokenised deposits.

In reality, all of these methods co-exist and need to work alongside one another.

Our job as regulators isn’t to pick winners. It’s to make sure the system as a whole is trusted, coherent and future-proof, whatever form a payment takes.

The National Payments Vision

That’s where the National Payments Vision[2] comes in.

An estimated 1,500 payments were made per second in the UK last year.

Buying a lunch meal deal, transferring a house deposit, filling up the car with petrol, drawing a pension.

Payments quietly sit underneath everything we do.

So clearly it has to be a priority for policymakers to ensure that those essential services are safe, accessible, deliver good value, and meet users’ needs.

And at the PSR and FCA, we are working closely with the Bank of England and Treasury through the Payments Vision Delivery Committee[3] (PVDC) on a coordinated approach that maximises our collective impact.

But we know this isn’t just a user story. It’s also a growth one.

Payments are at the heart of how our national economy functions – both as an enabler, and a source of, growth.

UK payments systems moved £107 trillion in 2023 – that’s equivalent to 44 times GDP.

So, by building on our track record as a global leader in payments, we can not only serve customers better; we can drive the innovation and growth our country needs at the same time.

And we should recognise that this is a resilience story too.

In a world becoming more connected, more digital, and in many ways more volatile, payments systems must be dependable.

Resilience doesn’t just come from a single system having strong controls, as important as that is.

It comes from choice - a range of payment options operating alongside one another…

Giving users flexibility, supporting competition that makes the overall system more robust, and breeding innovation.

This is why the National Payment Vision really matters.

It’s not just about today’s system working for people in their everyday lives.

It’s also about designing a system fit for the future: one that can cope with scale, complexity and change.

Consolidation isn’t the story – collaboration is

Having a foot in both the PSR and the FCA, I can say very confidently: both organisations are fully committed to delivering that Vision.

I know there’s been a lot of commentary about the consolidation of the PSR and the FCA, and I want to be clear about something:

This is an evolution, not a revolution.

The FCA and PSR have been working hand-in-glove for years on the issues that matter most in payments, and together, we’ve delivered significant changes. You can see it in our efforts to drive the adoption of Open Banking[4] – now at more than 16 million active users.

This has the potential to support growth by making payments faster, cheaper and more efficient, and we will be publishing a roadmap for the roll out of Open Finance by the end of next month.

We’ve made account-to-account payments an FCA-PSR priority, and the framework for commercial Variable Recurring Payments is already in place.

Momentum is building across the market and we expect transactions to be available in the first quarter this year. 

Then there is the APP fraud reimbursement scheme[5] – a genuinely major cross-industry effort involving new data-sharing expectations, better fraud analytics, and a clear liability framework.

In the year since the policy came into effect, 88% of money lost to APP scams and claimed back was reimbursed – that’s £112m returned to victims.

Claim volumes are down by 15%, and firms are resolving most claims quickly – within just five days.

So the legal processes around FCA-PSR consolidation will take their course, but the functional coherence is already there. The Treasury has not yet published the consultation response on consolidation[6], but the direction of travel is clear.

Our shared objectives around competition, innovation, and consumer protection will remain.

And we will retain the scope of the PSR’s objective on ‘service-users’ – a wider view that considers the interests of all who use payments systems - not just consumers, but merchants and payment services too.

Consolidation offers us a chance to bring the vast expertise of the PSR and the FCA even closer together, and streamline how we deliver. To bring the best of both.

Delivering the foundations of the National Payments Vision

That collaboration will be key as we look to capitalise on the opportunities ahead for payments and deliver against them.

One of the PVDC’s deliverables is to publish the Payments Forward Plan, which will set out a sequence of initiatives in both retail and wholesale payments, as well as certain aspects of digital assets.

This includes milestones in relation to modernising payments regulation, and we expect the Plan to be published in the next couple of months.

Through the PVDC, we have also set out our base strategy and delivered a new mechanism for infrastructure renewal. I know Sarah Breeden will talk more about that later.

We’ve been honest that progress on infrastructure has been more modest in recent years, while others have pushed on.

Australia with its New Payments Platform. Singapore with PayNow. India with UPI.

We cannot afford to stand still.

That’s why the strategy, and the work to support it, is deliberately designed with public-private partnership in mind, using the right expertise in the right functions so we can drive that transformation.

Not to rip out what works, but to strengthen it – with a strategic focus on the existing systems people rely on every day, like Faster Payments and Bacs. The Retail Payments Infrastructure Board[7] is responsible for translating the vision and strategy set by PVDC into design, and we are taking a close interest in their work, as an observing member to the Board.

National vision, international outlook

But modernising infrastructure on its own isn’t enough – it’s about joining things up, both domestically and internationally.

It might be called the National Payments Vision, but payments don’t stop at borders.

Businesses and consumers increasingly expect money to move seamlessly across systems and jurisdictions. Meeting that expectation means doing two things at once.

First, preserving what works today.

The UK’s existing payments systems support enormous volumes of economic activity, and trust in those systems has been built over decades.

It’s been pleasing to see the success of our consumer protection initiatives like Confirmation of Payee[8], which now covers more than 99% of payments.

There are an average of 26 checks every second, which has had a direct impact in reducing misdirected payments and fraud.

And it’s good to see this is inspiring others, including the EU and Australia, to develop similar systems to protect users and nurture trust.

Second, building the next generation, and building it well.

Interoperability – between systems, and across borders - is not just a technical ambition.

It’s about designing systems to genuinely solve problems for the people and businesses expected to use them.

Is it intuitive? Is it reliable? Is it trustworthy?

We’ve seen internationally that adoption doesn’t happen by accident. In some countries, new payments systems have scaled rapidly because they were aligned with wider economic or social policy.

There are certainly lessons for us to observe from other jurisdictions, and we will continue to work closely with, and learn from, our international partners. Something we hope will be helped by the FCA’s growing international presence[9]: in the US and Asia-Pacific already, Singapore and more to follow.

Harnessing new technologies

Because when we get the basics right – the rails, the connections, the trust – that is when we can really see innovation fly.

Payments innovation is already a big part of what comes through the FCA’s doors. Between 2019 and June last year, nearly a quarter (22%) of firms using our Innovation Pathways[10] were working on payments or open banking solutions.

We want to support the development of that new tech at pace, while protecting the fundamental trust and market integrity we know UK financial services relies on.

We’ve been clear on crypto: we are open for business, and we want crypto firms to succeed in the UK.

The gateway opens in September, and work is well underway on building a proportionate and competitive regime. In the last fortnight we’ve published our final Consultation Paper[11] for crypto regulation, which outlines proposals for how the Consumer Duty and other conduct rules will apply.

We will set out our final rules and framework in early summer, so please do share your views by the March 12 consultation deadline – we want innovators, regulators, government and industry all involved in shaping the future of crypto in the UK. 

Elsewhere, we recently launched an AI Supercharged Sandbox[12], giving firms space to test early proof-of-concept models in a safe environment with regulatory support.

And we’ve added a stablecoin-specific cohort in our Regulatory Sandbox to support issuers testing UK-issued stablecoins.

Done well, stablecoins have huge potential to unlock faster, cheaper and more reliable payments. It’s an exciting area. To help make the most of that opportunity, we are running a stablecoin sprint[13] next month to gather views and inform our regulatory approach.

Applications close on Sunday – so there’s still time to get your form in and take part!

Conclusion

People tend to take payments for granted. They just ‘work’.

But we won’t maintain that trust without collaboration - not just to build consensus on the problems that need fixing, but to shape a shared vision of the system we’re building.

That means bringing the ecosystem together.

We need infrastructure and systems that we can rely on today, and that can flex, scale and compete for the future.

We need them to be efficient, innovative, accessible, and deliver against the expectations of customers – whether businesses, consumers, merchants, or others.

We need them to work with domestic and international developments, with the ability to provide interoperability, protection and resilience.

And we need an eye to what’s next as firms innovate - recognising we may not know quite what ‘next’ will be.

Bringing the FCA and PSR together strengthens our ability to consider the needs of firms, consumers and systems.

And by working together – with the Bank, PVDC, users and firms of all types – we can ensure we deliver that.

A payments system people can rely on – whatever the moment, whatever the method, whatever comes next.