Wednesday 27th March, 2013

The government is proposing a utility style regulator for retail payment systems, to help ensure that best practice is followed and to improve the current system of self managing.

This has followed a consultation carried out last July, when the Government published a report on the future regulation and governance of the payments industry including the importance on payment mechanisms and the future of cheques.

At the time, Mr Hoban said: “We need a payments system that responds to the needs of customers and is not just run for the banks. Today’s package of measures is another step by the Government to make sure that the financial sector provides an effective and competitive service to the real economy.”

A key reform from this recommended the creation of the ‘Payments Strategy Board (PSB)’ tasked with monitoring and making recommendations to the payments industry. However, responses to this consultation argued that the PSB would need full regulatory powers if it was to be effective, which was not given by the government at the time.

The treasury has now decided to support a full utility-style regulator which will work to break down barriers to competition and ensure that the best interests of all stakeholders, including consumers, are taken into account.

A consultation, set-up by the treasury is inviting interested parties to respond by 25th June.