Stepping back, staying safe: a joined-up approach to growth

Consolidation

Rule 1 is ‘Out of clutter, find simplicity.’

The Government announced its intention to consolidate the PSR into the FCA about a year ago. It was a decision we welcomed.

Our work has always been complementary, and we made it work.

As an economic regulator, the PSR is focused on getting the foundations right – the payment systems and infrastructure that enable the ecosystem to operate.

And as the conduct authority, the FCA focuses on what sits on top – the delivery of the services and products consumers rely on.

But, that separation was a product of its time. The world was different then – we needed the specific focus on competition, innovation and access in payments infrastructure that came from the PSR.

Since then, both we and the market have evolved and grown. The ecosystem is too intertwined to treat parts in isolation.

Consolidation helps us take a more joined-up approach.

One of greater coordination, clearer responsibilities and smoother delivery for firms, who will no longer have to navigate two sets of front doors to get answers. And for us, one view across the ecosystem.

Ahead of legislation, we have worked to find simplicity where we can.

For example, many PSR colleagues have moved to the FCA as part of a phased transition and creation of new organisational structure. This allows us to maintain our momentum while realising the benefits of closer alignment.

So that the regulation of payment systems continues, the PSR will stay in place, with its own governance, while its powers are transferred. We expect both the outcome of the Government’s consultation and a roadmap to the completed consolidation soon.

However, already under our new structure, a single, joint payments horizon scanning team ensures our priorities across the FCA and PSR are aligned.

So we can plan the work programme and areas of focus – together.

This will change how we engage externally, but it is important to be clear: the PSR’s work will remain a core part of the FCA’s mission.

And our objective to look across the ecosystem is as important as ever. Competition, access and innovation are essential components of making the market work well.

And key in how we help the FCA be a smarter regulator and drive growth.

Taking a step back

Which brings me to rule number 2: From discord, find harmony.

In regulation, harmony is about striking a balance between innovation and preventing harm.

So, as we consider what needs to change, we are looking closely at the balance of risk. Where does harm occur, and who carries risk when things go wrong?

Before I get into payments, let me begin with an FCA example that strongly illustrates the point: our recent work on mortgages.

Even with historically low arrears and repossession, homeownership had become a far-off dream for many by 2025.

Older first-time buyers, and first-time buyer deposits rising to 94% of household income[1].

Several demographics left underserved and facing additional troubles accessing a mortgage, higher costs and less security in renting.

We had to act.

Because when access to homeownership is slipping out of reach, doing nothing isn’t neutral – it’s harmful.

So, with the Consumer Duty in place, we are rebalancing risk in a proportionate way.

The Duty provides a more outcomes-focused approach to regulation, allowing firms to innovate and serve consumers better.

It also lets us streamline our rules, cutting costs and complexity for firms and improving outcomes for consumers.

After we clarified that alternative approaches could meet our requirements, 85% of lenders updated their approach and can now offer about £30,000 more to many borrowers.

We are not weakening the safeguards.

Responsible lending is still a core principle of our mortgage framework. Lenders must be satisfied that borrowers can afford and sustain their repayments.

We’ve simply made the framework less prescriptive, so good outcomes can be delivered in different ways.

And last year, first-time buyers borrowed a record £82.8 billion[2] – accounting for 20% of all spending in the UK housing market. A near-20-year high, supported by our interventions.

Buying a home is a big financial decision and there is more we are doing throughout this year to help mortgage borrowers and potential borrowers.

But it’s just as important we make things easier for the smaller financial decisions we make every day – which brings me to payments.

Making the everyday easier

Contactless has become the preferred method of payment. It was used for nearly 1.6 billion transactions in November 2025[3], and will account for 43% of all payments by 2034[4].

But when we took feedback on contactless limits, we heard that the existing £100 limit lacked flexibility.

It’s true that a one-size-fits-all cap creates friction at the point of sale, whether you’re picking up the week’s groceries, a new household appliance or even a train ticket.

So we proposed to remove the limit entirely. Starting this month, firms will have the power to set their own limits.

We’ve heard concerns that this could invite higher rates of fraud, but the reality is more measured.

Although the limit is being removed, consumer protection remains – which is why this change is only available to firms with strong fraud controls in place.

And in the event of unauthorised fraud, such as a lost or stolen card, firms will still need to reimburse consumers.

Moreover, we don’t expect a sudden jump in limits overnight.

Most major high street banks – who together process most contactless payments – already let consumers set their own limit, currently up to £100. Or even remove contactless functionality completely.

And we’re encouraging firms that don’t offer this to do so, and give their consumers the choice.

Simply put, this change means more control and convenience for consumers. And less friction at the till for businesses.

Without weakening the safety net.

We’re taking the same approach to Open Banking.

We needed to move on and accelerate the program from a good base.

The Joint Regulatory Oversight Committee originally took on this mantle and made good progress, but it was another product of its time and potentially added complexity. We therefore combined the FCA and PSR teams into one single team under single leadership to sort the governance and add pace and clarity behind the scenes.

Those changes helped us accelerate this year, in partnership with the industry. We now have a framework in place, the first commercial variable recurring payments are happening, and we have the foundations on which to build and expand into e-commerce and wider use cases.

We have continued to make progress: this month, we’ll publish our roadmap for Open Finance.

It will set out how we’re going to take the safe, permissioned data sharing we’ve seen through Open Banking and apply it to more parts of consumers’ financial lives. From credit, to banking and insurance.

This has huge potential to improve consumers’ financial lives and drive growth. For example, by unlocking smoother mortgage journeys and helping applicants understand their eligibility much earlier.

In each of these instances, we took a different approach to find a sense of harmony.

One of simplifying the rules without lowering our standards. Of rebalancing risk and taking a step back where we can, with guardrails in place to ensure good outcomes for consumers.

This mindset underpins the broader steps we’re taking to support growth.

Both the FCA and PSR set out our pro-growth initiatives in a letter to the Prime Minister last year. By the time we published a joint update in December, we had achieved most of them.

That includes reducing burden; progressing new sandboxes and boosting support in those that already exist; and launching our Provisional Licence Regime in partnership with the Treasury.

These examples are all part of a wider shift in how we regulate to support growth – which matters even more as we begin to write new rulebooks.

Writing new rulebooks

We’ve come a long way, but the landscape will continue to change. So our approach must evolve with it.

Sometimes, that means creating new regulation – for instance, around cryptocurrency and stablecoins, which are becoming increasingly mainstream.

From the beginning, we have been clear: we are open for business.

We want firms to succeed here, so have been working at pace to build a crypto regime that is proportionate and competitive.

Open to innovation, but grounded in market integrity and trust.

We’ll publish our final rules this summer, before the gateway opens in September. You still have time to share your views, and we encourage you to do so. The deadline for our latest consultation paper closes this Thursday.

We’re exploring and testing stablecoins as well, and working closely with industry through our stablecoins cohort in the Regulatory Sandbox.

Just last week, we hosted a stablecoin sprint and are grateful for the brilliant ideas that we’re seeing.

Of course, we aren’t working alone. We’re staying closely connected with the Transatlantic Task Force for Markets of the Future to further financial market innovation, with a particular focus on digital assets and capital markets.

We’re also working alongside the Bank of England on our approach to regulation of systemic stablecoins, and with the Treasury to Modernise Payments Regulation.

And we are part of the Payments Vision Delivery Committee, which published the Payments Forward Plan[5] in February.

The Plan maps out what’s coming next, and when, across retail and wholesale payments, plus key elements of digital aspects.

It’s a key deliverable of the Government’s National Payments Vision of a trusted, world-leading payments ecosystem. One built on next-generation technology, and in which consumers and businesses have a choice of payment methods to meet their needs.

These initiatives are exciting. But we find ourselves at a crossroads, grappling with the perceived tension between growth and protection.

Striking the right balance

Which brings me to Einstein’s third rule: ‘In the middle of difficulty lies opportunity.’

Outcomes-based regulation brings opportunity. It also brings risk.

And it asks more of all of us. The regulator, government, firms and consumers alike.

We need a shared view of our goals and how we will measure them, so we can act quickly when needed. And a public-private partnership helps with that.

Because we want to foster growth.

For consumers, growth means higher living standards, greater choice and more confidence. And for firms, smoother markets, more innovation and higher productivity.

The Government has called it their ‘number one mission’, and we have made it a priority in our 5-year strategy.

But we cannot – and should not – remove risk entirely. It’s a normal part of consumers’ financial lives, and a source of the innovation and competition that propels growth.

The opportunity we have now is to rebalance it. To keep it proportionate and effective, and ensure consumers can make informed decisions suited to their tolerance and goals. And to find that sweet spot of growth and appropriate protection.

As we’ve seen with mortgages, that can mean changing mindset and considering where the risk sits.

Some will see better outcomes than others.

While updating our mortgage rules supports wider homeownership, we must also recognise and assess the trade-offs and potential risks – of financial difficulty for some, or an impact on house prices.

Likewise, removing the contactless limit could boost convenience for consumers, increase efficiency for businesses and encourage innovation in the payments space. But we are alive to concerns about fraud and overspending.

These are real risks. Which is why we put the right guardrails in place before we stepped back. For example, firms can remove the contactless limit only where risk is low and fraud controls are strong.

Our approach is simple.

Be precise about risk. Open to innovation. And uncompromising on integrity.

We are not lowering our standards. We are applying them in a way that allows us to step back when markets deliver safely, and step in when they don’t.

Through it all, our commitment to consumer protection and market integrity will remain at the forefront.

But as I said, this is a shared challenge. One we should all meet with confidence.

Conclusion

It was said[6] that Einstein’s 3 rules for working ‘stand out for use in our science, our problems, our times.’

And in the world of payments, regulation and innovation, they serve as a useful test.

Are we cutting through clutter? Reducing friction? Finding opportunity in change?

That’s what we’re trying to do as we bring the PSR into the FCA.

We’ll do it with 3 commitments.

Ensuring our work remains central to the FCA’s mission.

Simplifying and stepping back wherever possible.

And supporting competition, innovation and growth – but never at the expense of consumer protection or market integrity.

Because that’s how you build a market that earns confidence and builds sustainable growth.