Last week, both the Payments Systems Regulator (PSR) and the Financial Conduct Authority (FCA) announced their plans for the year ahead.
1st April 2015 will be a landmark day for the payments industry because the PSR, the new economics regulator, will start to regulate the industry. The PSR confirmed last week how it plans to regulate the payments systems industry and published a policy work programme outlining priorities for the coming year.
The PSR will work with other authorities to ensure that their activities do not duplicate those of the other bodies responsible for UK financial regulation and aim to make payment systems work better for the people and organisations that use them, whist also encouraging more choice, competition and innovation. Within the policy statement the PSR have outlined governance and decision making, pace of innovation and competitiveness as some of their key areas of concerns within the current sysytem.
Payment systems are vital to the UK’s financial system and process around 21 billion transactions which are estimated to worth around £75 trillion a year. Under the Financial Services (Banking Reform) Act 2013 (FSBRA) the PSR has been granted a variety of competition and regulatory powers in order to achieve its three main objectives:
- Ensuring there is effective competition in the markets for payment systems and payment services in the interests of service-users
- Encouraging the development of innovation in payment systems and payment services in the interests of service-users
- Maintaining that payment systems are operated and developed in a way that considers and promotes the interest of service-users
The Financial Conduct Authority (FCA) which became a regulator on 1st April 2013, also announced details of their new supervision and authorisation divisions last week and published its Business Plan for 2015/16 which highlights technology as one of its four focus areas.
The FCA plans to look into the mortgage market, pensions, competition in investment and corporate banking, asset management and to monitor developments in technology and how that affects firms and consumers, including a market study on the use of Big Data in the insurance market, in 2015/16.
The FCA will continue to look at:
- Technology developments and the impact on firms’ investment, consumers and regulator
- Threats to market integrity through poor culture and control
- The impact of large back-books on how firms deal with existing customers
- Consumer outcomes for pensions and retirement income products
Jane Tweddle, financial services industry principal at SAP UKI believes the FCA’s focus on technology is great news for the financial industry. “The Financial Conduct Authority’s focus on technology is an encouraging shift for the industry. The insurance sector specifically has been built up around legacy systems with little automation or tech innovation over the years. In this digital era, it’s no longer a sustainable status quo.”