Bold statement: The FCA and PSR have forged a clearer, more proactive path to regulate payments while driving growth and protecting consumers. Now, here’s how they’ve done it—step by step, with practical implications you can grasp.
Joint response to HM Treasury’s 2024 recommendations
The Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) provide an update on progress since HM Treasury’s guidance dated 14 November 2024, following their 5 December 2024 reply. Through the Payments Vision Delivery Committee, the two agencies have prioritized enabling growth in payments while maintaining proportionate, effective consumer protection.
Streamlining regulation to reduce congestion
- The FCA is taking the lead to minimize overlap on fraud, open banking, and open finance, improving coordination with the PSR.
- Early consolidation: PSR functions are being integrated into the FCA where feasible to smooth transitions and strengthen collaboration.
- Digital wallets: Work continues with the CMA’s Digital Market Unit and other parties, building on inputs gathered during earlier inquiries.
- Stakeholder alignment: Industry roundtables and policy/tech sprints are used to deliver consistent, joined-up messages.
- Payments Forward Plan: A published sequence of initiatives across retail/wholesale payments and digital assets is in the works.
- MoU update: The Memorandum of Understanding with the Bank of England and the PRA has been revised to improve cooperation on policy, strategy, and supervision, helping regulated firms understand the landscape.
Advancing open banking
The National Payments Vision has clarified the path for faster, cheaper payments and more innovation through open banking. A new FCA-PSR departmental structure replaces the Joint Regulatory Oversight Committee, expediting decisions on open banking and open finance.
- Industry leadership: A sector-wide group is resolving blockers and backing industry-led work, including commercial models for phase 1 VRPs (low-risk uses like utility payments) and phase 2 (e-commerce).
- Market-building: An industry-led group, funded by 31 sector participants, is establishing a new entity to support VRP phase 1 go-live.
- Future structure: Work with industry to set up a future open banking entity ahead of a Treasury-backed Statutory Instrument and the long-term regulatory framework.
- JROC integration: Remaining actions from the JROC roadmap are being folded into the long-term framework.
- Open finance experimentation: The FCA’s smart data accelerator is funding prioritised use cases (SME lending and mortgages), with a roadmap due in early 2026 and regulatory foundations to be in place by 2027. Collaboration with the Department for Business and Trade on cross-sector data sharing will shape the UK’s Smart Data strategy, aiming to reduce frictions and costs in global finance via cross-border data portability.
- Digital identity: Government thinking on digital identity is progressing, with potential major benefits for payments and ongoing collaboration with the Treasury as plans firm up.
Protecting consumers and ensuring safe, efficient payments
The Consumer Duty requires firms to put consumers first—delivering fair value, clear communications, and support for needs. Regulations also aim to prevent harm from fraud, mis-selling, and poor product design, building trust and enabling sustainable growth.
Fighting financial crime
A five-year FCA strategy centers on fighting financial crime, focusing on money laundering and APP (authorised push payment) fraud reduction. Prevention comes first, with joint industry and public-private efforts to strengthen the system and educate the public.
- Data-driven enforcement: The FCA and PSR invest in fraud prevention, including collaborative data sharing where feasible and aligned with the Government’s economic crime strategy.
- Real-time data sharing: A unified approach to data sharing promises to curb fraud as commercial initiatives proliferate. The regulators encourage responsible innovation while staying ready to intervene if needed.
- Intelligence-led supervision: Enhanced data and technology support authorisations and supervision to identify harm quickly, including spotting unauthorized services advertised on social media.
APP fraud reimbursement, October 2024–June 2025
- Reimbursement results: 88% of in-scope APP losses were returned to victims, and 83% of claims were resolved within five business days. There were 126,000 claims in the period, about 15% fewer than the prior year window.
- Independent review: The PSR commissioned an independent assessment of APP policies, including the reimbursement requirement, with final findings due in Q3 2026.
- Data sharing: The PSR shares APP fraud data with the FCA to monitor risk and support targeted engagement with firms, driving improvements in risk controls and reductions in fraud.
Strong Customer Authentication (SCA) and payment flexibility
- Regulation: The Government’s Vision supports removing certain SCA requirements from technical standards to enable agile, outcome-focused regulation by the FCA.
- Contactless payments: The FCA is consulting on a revised approach to contactless limits, aiming to give firms more flexibility to process low-risk transactions without mandatory authentication.
Promoting financial inclusion
Recognising that digital transactions aren’t accessible to everyone, the Vision emphasizes continuing work on financial inclusion. The FCA collaborates with Government to advance the Financial Inclusion Strategy, ensuring basic accounts and access to cash remain available as digital payments expand.
- 2024 update: The FCA published an update on UK Payment Accounts Access and Closures and will push forward with basic accounts and cash access protections.
Building an agile retail payments infrastructure
The UK aims for a next-generation retail payments framework that supports innovation, security, and growth. A public-private partnership model supports immediate resilience and functionality improvements to Faster Payments, with Pay.UK advancing industry collaboration under a joint decision by the Bank and the PSR (February 2025 endorsement).
- Strategy for retail payments infrastructure: The committee released a strategy outlining desired outcomes for future infrastructure, informing the work of the Retail Payments Infrastructure Board. The Board will translate strategy into design in consultation with the wider ecosystem. The FCA and PSR will monitor the Board’s decisions and how they affect overall objectives.
Closing notes
This update reflects ongoing alignment with the Government’s recommendations and growth mission. The FCA and PSR will continue collaborating and adjusting their approaches to support robust, innovative, and consumer-friendly payments in the UK.
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