HMT consultation response on consolidating the UK PSR within the UK FCA

HM Treasury (HMT) has published its response to its September 2025 consultation, confirming its intention to proceed with abolishing the UK Payment Systems Regulator (PSR) and consolidating its functions within the UK Financial Conduct Authority (FCA), subject to primary legislation. While responses were broadly supportive of integration within the FCA's existing FSMA framework, the government is still considering different legislative design options and will reflect further on feedback before finalising the model.

Key points from the response include:

• The PSR's functions under assimilated payment services legislation will transfer to the FCA, including functions under the Payment Services Regulations 2017, the Payment Card Interchange Fee Regulations 2015 and the Payment Accounts Regulations 2015 (including oversight of the Current Account Switching Service), alongside retention of a designation regime for bringing payment systems into and out of scope of regulation.
• Transitional legislation will preserve existing PSR requirements, technical standards and guidance (including those relating to the authorised push payment scam reimbursement regime), with the FCA determining its regulatory approach under the new framework. These transferred functions may be reviewed as part of HMT's wider programme to modernise and future proof payment services and e money law, which it will set out in detail in due course.
• The substance of the PSR's statutory objectives will be maintained, with consideration given to how these align with the FCA's strategic objective and its secondary international competitiveness and growth objective, and the regulators are already working together on transition planning ahead of legislation—while the treatment of statutory “have regard” requirements, are to be covered in a separate consultation.
• The FCA will receive powers broadly equivalent to those currently exercised by the PSR, including powers to regulate fees and impose price controls where appropriate, informed by the High Court decision on the PSR's powers (which clarity is welcomed on).
• The payment systems access regime will be simplified while the appeals framework will be streamlined, with specific directions and requirements, or their equivalents, appealable to the High Court rather than the Competition Appeals Tribunal.
• An oversight and accountability framework will apply to the FCA when it is acting in relation to payment systems, replicating the substance of the current PSR framework and extending existing FCA accountability mechanisms, including HMT powers to intervene where proposed FCA action may conflict with international obligations and to commission independent reviews of the FCA's economic efficiency and effectiveness. The FCA will also be accountable to Parliament through existing reporting arrangements.
• These reforms are not expected to affect the UK's participation in the Single Euro Payment Area. Ahead of legislation, the FCA and PSR will continue coordinating to support operational readiness, and HMT will set out further details on legislative timing and the wider reform of assimilated payment services law in due course.

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