UK Payment Systems Regulator Consults Further Remedies for Competition Issues Relating to Bank Ownership of Payment Infrastructure 

The Payment Systems Regulator published proposals for remedying the lack of competition in the provision of UK payments central infrastructure for Bacs, FPS and LINK which means that the incumbent provider, VocaLink, faces limited competitive pressure and minimal incentives to provide more efficient and innovative services. 

The PSR published its final report on its market review into the ownership and payment infrastructure competitiveness in the UK on July 28, 2016. The final report identified the competition issues and outlined potential remedies, including undertaking competitive procurement exercises, such as issuing guidance and requiring operators of payment service providers to follow a prescribed set of processes and implementing enhanced interoperability, including a common international messaging standard, for Bacs and FPS, and divestment by the four largest shareholders in VocaLink. Following feedback to those initial proposals, the PSR is now consulting on mandating competitive procurement exercises for Bacs, FPS and LINK when the operators of these systems purchase central infrastructure services and introducing the ISO 20022 messaging standard in future procurements for Bacs and FPS. 

The PSR is no longer considering the divestment remedy for VocaLink because of the proposed acquisition by MasterCard of VocaLink which would, in the PSR's view, remedy the issue. If the proposed acquisition does not go ahead, the PSR will consult separately on the divestment remedy. 

The consultation closes on February 1, 2017. The PSR is intending to publish its final decision on the remedies in Q2 2017. 

View the consultation paper.