UK FCA and PSR joint response to HMT's 2024 recommendations on payments regulation

The UK Financial Conduct Authority (FCA) and UK Payments Systems Regulator (PSR) have issued a joint letter to HM Treasury (HMT) (dated 11 November) providing an update on their progress against the 2024 recommendations HMT set for payments regulation and outlining focus areas through to 2026.

Key forward-looking priorities include:

• Co-ordination - the regulators set out how they have been working in an increasingly collaborative way to ease congestion in payments regulation.
• Open banking and open finance – the FCA has established a new department incorporating FCA and PSR capabilities, replacing the Joint Regulatory Oversight Committee (JROC) and streamlining decision-making for open banking and open finance. The FCA is working with industry to establish a future entity for open banking ahead of developing the statutory instrument with HMT and subsequently the long-term regulatory framework for open banking. In addition, the FCA has launched the smart data accelerator, with applications currently open for two prioritised open finance use cases in SME lending and mortgages. The FCA will publish a roadmap for this in early 2026, with regulatory foundations in place during 2027. The FCA is also collaborating with the Department for Business and Trade on cross-sector data sharing.
• Consumer protection and fraud prevention – the FCA is investing in intelligence and data capabilities to identify higher-risk firms and activities, disrupt criminal networks, and sanction those enabling financial crime. It will leverage technology in its authorisations and supervisory work to detect harm faster, including identifying unauthorised financial services promoted via social media. In parallel, the PSR has commissioned an independent review of its APP scam policies, including the reimbursement requirement, with the final report due by Q3 2026. The UK government confirmed in its National Payments Vision it will remove strong customer authentication requirements from the relevant technical standards, enabling the FCA to incorporate aspects of these into its rules and guidance for more agile, outcome-based regulation.
• Financial inclusion – as financial services shift online, those lacking access to devices or digital skills may struggle to make payments and manage their money. This remains a key area of focus for the government's Financial Inclusion Committee.
• Retail Payments Infrastructure – both regulators are continuing work to ensure the UK's retail payments systems meet future needs, supporting innovation and resilience.

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