The new Payment Systems Regulator has today (13 November) set out how it proposes to regulate the £75,000bn payments industry when it becomes fully operational on 1 April 2015.
Open for consultation until 12 January 2015, the package of measures is focused on driving industry strategy and encouraging innovation, opening up the ownership, control and governance of payment systems, and providing more open, transparent access to payment systems.
The PSR proposes to create a Payments Strategy Forum with “broad” service-user representation.
It also proposes publishing board minutes and making votes mandatory. From 30 September 2015, payment system operators will need to annually report back to the PSR on how they have improved these areas.
Bacs, cheque and credit clearing, Chaps and faster payments must provide access on an objective, risk-based, fair and open basis, and publicly disclose their access requirements.
The consultation said the application process should be quicker, simpler and not distort competition.
From 30 June 2015 all operators will have to report annually showing how they are complying with relevant access rules.
The PSR will also set high-level behavioural expectations through three ‘principles’, requiring the industry to act in an open and cooperative way with regulators, to be compliant, and to manage risks so the smooth operation of payment systems is not jeopardised.
Two market reviews will be launched before next April: one to assess the ownership and competitiveness of the current infrastructure and consider other possible models and structures, while the other will look at how indirect access is provided.
Where firms fall short of expectations, the PSR will have the power to carry out enforcement investigations, issue penalties and censures, and compel remedial action.
It will also handle commercial disputes regarding access to payment systems or charges relating to services provided. It also has the power to force a firm to sell its interests in an operator.
Hannah Nixon, managing director of the PSR, said: “The systems we have today have been developed incrementally over time by the major banks. So while they are relatively resilient, they are often treated as back office functions.
“Competition is limited, decision making opaque, and this is stifling innovation. This has to change.
“I want to see an industry that is responsive to, and focused on, the needs of those using payment services. This will be an industry that encourages and enables competition and innovation, provides value for money, while maintaining reliability and security.”
peter.walker@ft.com
